Robert's Reasoning on Obamacare

Chief Justice John Roberts

Many still ask today, How did Chief Justice Roberts (plus 4) find the Obamacare mandate was actually a tax (and not a penalty)? Roberts cities Justices Story and Holmes - if a statute has two different interpretations, the Court must adopt the one that avoids unconstitutionality. He notes that the only consequence of not obeying the mandate is making an additional payment to the IRS when paying taxes. So in effect, the mandate is a tax hike on those not carrying health insurance. Robert says the law is not concerned whether this is a natural reading of the statute, only a "fairly possible" one.  It's a fair possible reading because:

• It looks like a tax because it is only imposed on those who make enough to be required to file taxes.

• The amount to be paid is determined by factors such as taxable income, number of dependents, and joint filing status - basically tax factors.

• The mandate is in the Internal Revenue Code.

• It's enforced by the IRS, which must assess and collect it "in the same manner as taxes."

• It generates revenues for the government.
(These were arguments previously made to say it was a tax when it was considered.) 

Roberts acknowledges Congress labelled this a penalty, and not a tax. He notes the Court has not always followed the label Congress gives an Act. So it did not consider the "Child Labor Tax" to fall with the Taxing Power. He cites a series of Supreme Court cases where Congressional Acts were treated as a tax, though they were variously called a license, a surcharge, and even a penalty. They all used a "functional approach" rather than following the label.

Roberts notes additional factors that indicates a tax, not a penalty:

• By statute, the amount due can never be more than the price of insurance.
• The mandate does not require intent questions like a penalty usually does.
• Though its IRS enforced, it does not allow criminal enforcement like a penalty usually does.
• If someone chooses to pay the penalty rather than comply, they have completely complied with the law, quite unlike a penalty.
  
  (I only summarized part of the full opinion - link below -  from Section III B - starting on page 31.)

http://msnbcmedia.msn.com/i/msnbc/Sections/NEWS/scotus_opinion_on_ACA_from_msnbc.com.pdf