The search for a limiting principle on the Commerce and Necessary and Proper clauses goes back to McCulloch v. Maryland. Now the ACA proposed to impose a regulatory penalty, not on doing something, but on not doing something. It is argued elsewhere (see below) that that is unconstitutional.
Five of the justices didn't buy it, and decided that not penalizing inaction was at least one limiting principle on the Commerce and Necessary and Proper clauses, but then Chief Justice John Roberts did something almost no one expected, and against which the litigants had not prepared or presented adequate arguments. He declared that the individual mandate was authorized as the exercise of the tax power, and even gratuitously injected that it was not a direct tax, subject to apportionment.
Is there historical precedent for a tax on not doing something? Can that be a proper taxable object?
Some have argued that a tax on A with deductions for doing B is a tax on not doing B, but that line of analysis doesn't work, grammatically. There is still a taxable object A, assuming it is a proper taxable object. The tax is not on not doing B.
Grammatically the verb to tax is basically transitive, even tritransitive, with the thing taxed, the taxpayer, and the amount all needing to be defined. Thus one can say
The agent taxed the purchase $10 from him.
or
The agent taxed him $10 on the purchase.
But in each case it is the purchase that triggers the tax, and therefore is its primary object, the thing that defines the taxpayer and the tax amount.
The Roberts precedent may turn out to be worse than the Affordable Care Act, which can be repealed, but the precedent can only be overturned by another Supreme Court decision in a case that may not come to them for a century. In the meantime it could give rise to a new kind of tax used to coerce people, not just at the federal level, but at the state and local level as well.
We can examine how federal gun control statutes began as tax statutes.
Initially, a $200 tax was imposed on the purchase of certain kinds of disfavored firearms, machine guns and saw-off shotguns.
Then it was made a crime (presumably under the N&P Clause applied to the Tax Clause) to possess an item on which a tax had not been paid. I would argue that is not authorized, because it is "necessary and proper for carrying into execution", which is only to perform an official duty, not to get an outcome intended from the exercise of the power.
Then ATF agents were directed to refuse to accept payment of the tax, and to arrest and prosecute anyone who attempted to pay it for possession. That is in conflict with the ancient mandate that government agents must enable persons to comply if they try to. It is also barred by the protection against self-incrimination.
One might ask what happened to the rule of law that refusal of a legal tender payment on a debt discharges the amount of the payment from the debt? By that rule, it would seem that if the government refuses to let you pay your debt, the debt is forgiven.
Originally, only profitable transactions or use were considered proper taxable objects for indirect taxes, and a tax on possessing something would be direct and subject to apportionment.
Incidentally, the oft-cited Militia Act of 1792 was not a mandate to purchase firearms, but a mandate under a Militia Clause to show up with firearms at musters, with no requirement for purchase, just possession.
Under the new precedent created by the Roberts opinion, it would now be deemed lawful to impose a tax on not purchasing some drug, in some impossible amount, like $1 million a day, as a way to get everyone to buy it, with perhaps only the government being the vendor at a high price.
The power to tax is not unlimited. Court precedents have already established, correctly, that the exercise of a fundamental right is not a proper taxable object, and may be only incidentally burdened. We can therefore ask whether there is a natural right not to act, and with certain public duty exceptions, there is.
This proposed clarifying amendment sets forth some limiting principles that research indicates were part of original understanding:
- A tax shall be considered direct if under the totality of circumstances in which it is applied, less than half of it is likely to be passed through to a further individual purchaser of the thing taxed as a higher cost of purchase, and indirect if half or more of it is likely to be thus passed through.
- An indirect tax may only be imposed on a profitable transaction or use the profit on which is or is readily convertible into a monetary equivalent.
- A direct tax may be imposed on being or having something without a profitable transaction involved.
- No tax shall
- unduly burden the exercise of a natural or social right, or
- be imposed on not doing something, or
- offer a deduction for doing something there is no power to compel one to do, or
- be to regulate something not otherwise subject to a power to regulate, or
- be at a rate beyond the point of diminishing return of revenue.
- When in doubt, a tax shall be considered direct.
- Taxes on corporate entities or trusts shall be considered indirect.
See also:
- Tax Matters — Portal to the subject of taxes, tax abuses, and tax reform.
- Unnecessary and Improper — Analysis of Necessary and Proper Clause.
- Individual mandate goes down in the 11th — This is the case that went to the Supreme Court.
- Is it a "tax" or not a "tax"? — Discussion of an article by Rob Natelson.
- What "commerce" meant to the Framers — Evidence of original meaning of the term.
- The original meaning of "carrying into execution" — The restrictive phrase has never been properly adjudicated.
- First day of oral arguments on Affordable Care Act - 2012/03/26 — Video of Constitution meetup.
- Original Understanding of the Commerce Clause, Jon Roland — Historical background.
- Civil Rights Act —Amendment to add explicit rights under the 14th Amendment.
Similarly, removal by a court of disabilities of gun ownership are not recognized as exempting someone from prosecution under 18 USC 922 on the grounds that they have no budget for processing applications for exemption (but do have a budget for conducting prosecutions). All they have to do to assert a power is have a budget for exercising it without a budget for not exercising it.