Not the power to destroy: An effects theory of the tax power

Virginia Law Review

Volumn 98, Issue 6, 2012, Pages 1195-1253

  Cooter, Robert D ^a   Siegel, Neil S ^b  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b DUKE UNIVERSITY   (United States)

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EID: 84871897168     PISSN: 00426601     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (208)

1. United States v. Kahriger, 345 U. S. 22, 29 (1953).
2. See, e.g., Carter v. Carter Coal Co., 298 U. S. 238, 303-04 (1936) (invalidating the Bituminous Coal Conservation Act of 1935 because federal regulation of wages and hours concerned production, not commerce);
3. A. L. A. Schechter Poultry Corp. v. United States, 295 U. S. 495, 545-46 (1935) (invalidating the Live Poultry Code for New York City, which regulated the sale of sick chickens and which included wages, hours, and child-labor provisions, based on an "indirect" relationship to interstate commerce);
4. United States v. E. C. Knight Co., 156 U. S. 1, 12-13 (1895) (holding that the Sherman Antitrust Act could not be used to thwart a monopoly in the sugar refining industry because the commerce power did not authorize Congress to regulate manufacturing, which was antecedent to commerce).
5. See Child Labor Tax Case, 259 U. S. 20, 38 (1922).
6. For numerous instances in addition to the impost, see infra Part I; see generally Ruth Mason, Federalism and the Taxing Power, 99 Calif. L. Rev. 975, 984 (2011) (offering many examples to substantiate the consensus among tax scholars that "the [federal] government uses the tax law not only to raise revenue, but also to influence taxpayer behavior"); id. at 989 ("Congress undeniably uses taxation to raise the costs of activities it deems undesirable.").
7. See United States v. Lopez, 514 U. S. 549, 561 (1995);
8. see also United States v. Morrison, 529 U. S. 598, 617 (2000).
9. Public L. No. 111-148, 124 Stat. 119 (2010);
10. see also Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010).
11. 132 S. Ct. 2566 (2012).
12. 26 U. S. C. § 5000A (b) (Supp. 2011).
13. We and others have discussed this question elsewhere. Siegel discussed this Article on the blog Balkinization both before and after the Supreme Court decided NFIB. Neil Siegel, Not the Power to Destroy: An Effects Theory of the Tax Power, Balkinization, June 28, 2012, http://balkin. blogspot.com/2012/06/ not-power-to-destroyeffects-theory-of.html;
14. Neil Siegel, Not the Power to Destroy: A Theory of the Tax Power that Justifies the Minimum Coverage Provision, Balkinization, Mar. 19, 2012, http://balkin. blogspot.com/2012/03/not-power-to-destroy-theory-of-tax.html. After the Court decided the case on June 28, 2012, Jeff Rosen provided a link to this Article in writing online at The New Republic that "[a]rguments by liberal scholars who care about constitutional text and history, such as Neil Siegel of Duke Law School, were reflected in Chief Justice Roberts's opinion about the taxing power."
15. Jeffrey Rosen, Welcome to the Roberts Court: How the Chief Justice Used Obamacare to Reveal His True Identity, The New Republic, June 29, 2012, http://www.tnr.com/blog/plank/104493/welcome-the-roberts-court-who-the-chief- justice-was-all-along. Randy Barnett wrote on the Volokh Conspiracy blog that "it looks like Neil Siegel and Bob Cooter anticipated Chief Justice Roberts['] approach in their paper, Not the Power to Destroy⋯ and may even have provided him with the road map for his analysis."
16. Randy Barnett, The Unprecedented Uniqueness of Chief Justice Roberts' Opinion, The Volokh Conspiracy, July 5, 2012, http://www.volokh.com/2012/07/05/ theunprecedented-uniqueness-of-chief-justice-roberts-opinion/. We posted on SCOTUS-blog an account of the similarities in logic, citations, and rhetoric between this Article and the Court's decision.
17. Neil Siegel and Robert Cooter, Online ACA Symposium: A Theory of the Tax Power that Justifies-and May Have Informed-the Chief Justice's Analysis, SCOTUSblog, July 9, 2012, 12:48 PM, http://www.scotusblog.com/2012/07/onlineaca- symposium-a-theory-of-the-tax-power-that-justifies-and-may-have-informed-the- chiefjustices-analysis-2/. Brian Leiter's blog linked approvingly to our SCOTUSblog post.
18. Brian Leiter, Cooter & Siegel: The Real Originators of the Tax Power Theory for Upholding the ACA, Brian Leiter's Law School Reports, July 10, 2012, http://leiterlawschool.typepad.com/leiter/2012/07/cooter-siegel-the-real- originators-ofthe-tax-power-theory-for-upholding-the-aca.html. Note, however, that the Chief Justice's opinion does not cite our paper or any scholarly article published in a law review.
19. We limit our analysis to the distinction between a tax and a penalty under Article I, Section 8. We do not analyze the distinction between taxes and fees under the Export Clause, U. S. Const. art. 1, § 9, cl. 5, nor do we analyze the distinction in the constitutional context of intergovernmental tax immunity. Finally, we do not analyze the distinction between a tax and a penalty in various federal statutes, including the federal tax Anti-Injunction Act
20. U. S. C. § 7421 (a) (2006)
21. the Tax Injunction Act, 28 U. S. C. § 1341 (2006)
22. or the Bankruptcy Act, 11 U. S. C. §§ 101-112 (2006). These constitutional and statutory settings implicate context-specific legal questions that we cannot attempt to address here.
23. See Robert D. Cooter & Neil S. Siegel, Collective Action Federalism: A General Theory of Article I, Section 8, 63 Stan. L. Rev. 115 (2010).
24. U. S. Const. art. I, § 8, cl. 1.
25. See, e.g., Jack N. Rakove, Original Meanings: Politics and Ideas in the Making of the Constitution 24-28, 47-48, 167-68, 188-89 (1996) (discussing various failures of the Articles of Confederation). Almost all of the first thirty-six essays in The Federalist detail the inadequacies of the Articles.
26. See generally Calvin H. Johnson, Righteous Anger at the Wicked States: The Meaning of the Founders' Constitution 15-26 (2005) (arguing that the most pressing need at the time of the Constitution's creation was to allow the federal government to tax in order to pay off its Revolutionary War debts).
27. See generally W. Elliot Brownlee, Federal Taxation in America 16 (2d ed. 2004) ("Among the most pressing [practical problems] were how to finance the Revolutionary War debts, and how to establish the credit of the nation in a way that would win respect in international financial markets."); Johnson, supra note 20, at 18.
28. Akhil Reed Amar, America's Constitution: A Biography 107 (2005) ("Without the ability first to borrow money from abroad when war threatened and then to pay back the loans on time⋯ America would become a tempting target for European empires lusting after dominion. "); Brownlee, supra note 21, at 16-17 ("A central goal was to fund the foreign debts that the Confederation had inherited from the Revolutionary War, and to do so in a way that would win the confidence of the international financial markets to which the new nation would have to turn for capital.").
29. See generally Roger H. Brown, Redeeming the Republic: Federalists, Taxation, and the Origins of the Constitution 12 (1993) (describing the failure of the requisition scheme).
30. See, e.g., Brownlee, supra note 21, at 15 ("The Continental Congress depended on funds requisitioned from the states, which usually ignored calls for funds or responded very slowly. There was little improvement under the Articles of Confederation. States resisted requisitions and vetoed efforts to establish national tariffs.").
31. James Madison, Vices of the Political System of the United States, in James Madison: Writings 69 (Jack N. Rakove ed., 1999) [hereinafter Madison, Vices Memo].
32. See, e.g., Brownlee, supra note 21, at 16 ("The Constitution reflected the desire of James Madison, Alexander Hamilton, and its other leading supporters to provide the new central government with far greater capacity to tax than the old national government had enjoyed under the Articles of Confederation. The protracted political crisis of the 1780s convinced Madison and Hamilton that the new representative government must have the fiscal power required to create a strong and meaningful nation. "); Akhil Amar, The Lawfulness of Health-Care Reform, 122 Yale L. J. Online 5 (forthcoming 2012), available at http://ssrn. com/abstract=1856506 ("A primary goal (indeed, perhaps the single most important and frequently expressed goal) of the Federalist Founders was to empower the federal government to impose taxes upon individuals to finance basic federal functions⋯.").
33. Larry D. Kramer, Madison's Audience, 112 Harv. L. Rev. 611, 619 (1999). State discrimination against interstate commerce was yet another major collective action problem facing the states during the 1780s that Congress was impotent to address. Madison thus decried "want of concert in matters where common interest requires it", a "defect⋯ strongly illustrated in the state of our commercial affairs. How much has the national dignity, interest, and revenue suffered from this cause?" Madison, Vices Memo, supra note 32, at 71.
34. "The Framers adopted a complete national government able to collect taxes from individuals so as to avoid military action that would amount to civil war." Johnson, supra note 20, at 88. The Supreme Court has recalled this history. See, e.g., Veazie Bank v. Fenno, 75 U. S. (8 Wall.) 533, 540 (1869) ("The General Government, administered by the Congress of the Confederation, had been reduced to the verge of impotency by the necessity of relying for revenue upon requisitions on the States, and it was a leading object in the adoption of the Constitution to relieve the government, to be organized under it, from this necessity, and confer upon it ample power to provide revenue by the taxation of persons and property. And nothing is clearer, from the discussions in the Convention and the discussions which preceded final ratification by the necessary number of States, than the purpose to give this power to Congress, as to the taxation of everything except exports, in its fullest extent.").
35. U. S. Const. art. I, § 8, cl. 1.
36. U. S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, at 1106(1975), available at www2.census.gov/prod2/ statcomp/documents/CT1970p2-12.pdf. Table Y 352-357 covers 1789-1939 and distinguishes between customs and internal revenue. See Brownlee, supra note 21, at 13-14 ("[T]he tax regime that followed the creation of the new constitutional order was based on customs duties; it lasted until the Civil War, making it the longest in American history."). The Federalists made only limited use of excise taxes after the Whiskey Rebellion of 1794, limiting them almost entirely to goods and services used by affluent Americans, such as levies on carriages and snuff manufacturing, and stamp duties on legal transactions. Id. at 23-24.
37. U. S. Bureau of the Census, supra note 48.
38. "[T]he taxing power is often, very often, applied for other purposes than revenue." 2 Joseph Story, Commentaries on the Constitution of the United States § 962 (1833).
39. Id. at 45 n. 26 (citing R. Alton Lee, A History of Regulatory Taxation (1973)).
40. McCulloch v. Maryland, 17 U. S. (4 Wheat.) 316, 415 (1819).
41. National leaders "faced issues that went far beyond the financial problem of meeting demands to increase government spending." Brownlee, supra note 21, at 3. These crises involved either the survival of the nation or the meaning of the American ethos, our "fundamental nature as a people."
42. Hanna Fenichel Pitkin, The Idea of a Constitution, 37 J. Legal Educ. 167, 167 (1987).
43. 26 U. S. C. § 163 (h) (3) (E) (2006). Professor Mason notes that the deduction for home mortgage interest was "[e]stimated to cost the federal government over $100 billion in 2009." Mason, supra note 5, at 985 (citing Office of Mgmt. & Budget, Analytical Perspectives
44. Budget of the U. S. Government, Fiscal Year 2009, at 298 tbl.19-3).
45. For an account of the history, see Dwight D. Eisenhower: Compassionate Conservative, in David Blumenthal & James A. Morone, The Heart of Power: Health and Politics in the Oval Office 99, 112-14 (2010).
46. 26 U. S. C. § 106 (a) (2006).
47. Brief for Petitioner at 4, Dep't of Health and Human Servs. v. Florida, 132 S. Ct. 2566 (2012) (No. 11-398).
48. During the New Deal, for example, the Democratic Party created the extensive system of farm subsidies that continue despite criticism and opposition. For a discussion of the current politics of farm subsidies, see Jennifer Steinhauer, Farm Subsidies Become Target Amid Spending Cuts, N. Y. Times, May 6, 2011, at A13, available at http://www.nytimes.com/2011/05/07/us/ politics/07farm.html.
49. 75 U. S. (8 Wall.) 533 (1869).
50. 195 U. S. 27 (1904).
51. 249 U. S. 86, 94-95 (1919).
52. 247 U. S. 251, 276-77 (1918).
53. Child Labor Tax Case, 259 U. S. 20, 35 (1922).
54. Id. at 37 ("[A] court must be blind not to see that the so-called tax is imposed to stop the employment of children within the age limits prescribed. Its prohibitory and regulatory effect and purpose are palpable. All others can see and understand this. How can we properly shut our minds to it?"); id. at 39 ("The case before us can not be distinguished from that of Hammer v. Dagenhart." (citation omitted)).
55. Id; accord United States v. Butler, 297 U. S. 1, 61 (1936) ("A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the Government. The word has never been thought to connote the expropriation of money from one group for the benefit of another."); id. ("The exaction cannot be wrested out of its setting, denominated an excise for raising revenue and legalized by ignoring its purpose as a mere instrumentality for bringing about a desired end. To do so would be to shut our eyes to what all others than we can see and understand."
56. (citing Child Labor Tax Case, 259 U. S. at 37)).
57. Child Labor Tax Case, 259 U. S. at 36-37.
58. 259 U. S. 44, 68 (1922).
59. 296 U. S. 287, 295-96 (1935).
60. Id. at 294; accord United States v. La Franca, 282 U. S. 568, 572 (1931) ("A tax is an enforced contribution to provide for the support of government; a penalty⋯ is an exaction imposed by statute as punishment for an unlawful act. The two words are not interchangeable, one for the other.").
61. Constantine, 296 U. S. at 294.
62. See, e.g., Alexander M. Bickel, The Least Dangerous Branch: The Supreme Court at the Bar of Politics 45 (1962) ("Serving this value [of laissez faire] in the most uncompromising fashion, at a time when it was well past its heyday, five Justices, in a series of spectacular cases in the 1920's and 1930's, went to unprecedented lengths to thwart the majority will. The consequence was very nearly the end of the story."). For a recent account of the political fight over President Franklin Delano Roosevelt's "court-packing" plan
63. see, e.g., Jeff Shesol, Supreme Power: Franklin Roosevelt vs. The Supreme Court (2010);
64. see also Barry Friedman, The Will of the People: How Public Opinion Has Influenced the Supreme Court and Shaped the Meaning of the Constitution 3-8, 202, 214, 217-29 (2009).
65. Compare, e.g., Lochner v. New York, 198 U. S. 45, 53 (1905) (reasoning that the Fourteenth Amendment's Due Process Clause protects freedom of contract)
66. with W. Coast Hotel Co. v. Parish, 300 U. S. 379, 391 (1937) ("What is this freedom? The Constitution does not speak of freedom of contract."). For further discussion of whether Lochner remains good law
67. see Richard A. Primus, Canon, Anti-Canon, and Judicial Dissent, 48 Duke L. J. 243, 244 (1998) ("Lochner is never cited for its legal authority. Although it has never been formally overruled, it is well understood among constitutional lawyers that relying on Lochner would be a pointless, if not a self-destructive, endeavor."). (Pubitemid 128426577)
68. Compare, e.g., Thomas More Law Ctr. v. Obama, 651 F.3d 529, 553 (6th Cir. 2011) (Sutton, J., concurring in part and delivering the opinion of the court in part) ("The taxing-power cases, it is true, are old. Yet cases of a certain age are just as likely to rest on venerable principles as stale ones, particularly when there is a good explanation for their vintage.")
69. with Brian Galle, Conditional Taxation and the Constitutionality of Health Care Reform, 120 Yale L. J. Online 27, 28(2010), available at http://yalelawjournal.org/2010/5/31/galle.html ("[T]he best reading [of existing doctrine] is that courts will not impose any substantive limits on the uses to which Congress may put its taxing authority. Any confusion results from the Court's failure to formally overrule outdated precedents that once suggested otherwise.").
70. 300 U. S. 506 (1937).
71. 340 U. S. 42 (1950).
72. Id. (citations omitted). The power of Congress to regulate conduct through taxation (or conditional expenditures) under the Taxing Clause is not limited to regulation that is otherwise permissible under another enumerated power. See id. ("Nor does a tax statute necessarily fall because it touches on activities which Congress might not otherwise regulate."); The License Tax Cases, 72 U. S. (5 Wall.) 462, 470-71 (1866) (upholding under the tax power a federal law requiring the purchase of a license before engaging in certain businesses, including intrastate businesses, even though "Congress has no power of regulation nor any direct control" over "the internal commerce or domestic trade of the States").
73. Sanchez, 340 U. S. at 45.
74. 345 U. S. 22 (1953)
75. overruled on other grounds by Marchetti v. United States, 390 U. S. 39, 41-42 (1968).
76. 345 U. S. at 31; see id. at 28 ("It is conceded that a federal excise tax does not cease to be valid merely because it discourages or deters the activities taxed. Nor is the tax invalid because the revenue obtained is negligible.").
77. Id. In Bob Jones University v. Simon, the Court acknowledged its abandonment of the pre-1937 jurisprudence, which sought to distinguish between "regulatory and revenue-raising taxes." 416 U. S. 725, 741 n. 12 (1974).
78. 511 U. S. 767 (1994);
79. see U. S. Const. amend. V.
80. See, e.g., Kurth Ranch, 511 U. S. at 769 n. 1.
81. Id. at 781 (quoting United States v. Constantine, 296 U. S. 287, 295 (1935)). The Court also deemed it significant that the exaction "is exacted only after the taxpayer has been arrested for the precise conduct that gives rise to the tax obligation in the first place", id., and that the exaction "is levied on goods that the taxpayer neither owns nor possesses when the tax is imposed", id. at 783.
82. Id. at 779 (citing the Court's invocation of the Child Labor Tax Case in A. Magnano Co. v. Hamilton, 292 U. S. 40, 44 (1934)).
83. See 1 Laurence H. Tribe, American Constitutional Law 846 (3d ed. 2000).
84. See United States v. Lopez, 514 U. S. 549 (1995);
85. United States v. Morrison, 529 U. S. 598 (2000).
86. Lopez, 514 U. S. at 549.
87. See, e.g., Child Labor Tax Case, 259 U. S. at 36 ("If an employer departs from this prescribed course of business, he is to pay to the government one-tenth of his entire net income in the business for a full year. The amount is not to be proportioned in any degree to the extent or frequency of the departures, but is to be paid by the employer in full measure whether he employs five hundred children for a year, or employs only one for a day.");
88. cf. Kurth Ranch, 511 U. S. at 780 ("A significant part of the assessment was more than eight times the drug's market value-a remarkably high tax.").
89. See, e.g., Frank Lyon Co. v. United States, 435 U. S. 561, 573 (1978).
90. In addition to decisions like the one in the Child Labor Tax Case, the Court in The License Tax Cases upheld a federal law under the tax power providing "that no persons should be engaged in certain trades or businesses, including those of selling lottery tickets and retail dealing in liquors, until they should have obtained a 'license' from the United States", which "license" was later relabeled a "special tax" by Congress, on the ground that "[t]he granting of a license⋯ must be regarded as nothing more than a mere form of imposing a tax." 72 U. S. (5 Wall.) 462, 463, 471 (1866) (footnote omitted). The Court praised Congress for substituting the term "special tax" for "license." Such "judicious legislation", the Court wrote, "removed all future possibility of error" and "guarded against any misconstruction of the legislative intention. " Id. at 473. But the Court did not rest its holding on the substitution or intimate that the exaction would not have qualified as a tax if Congress had stuck with the word "license."
91. See Seven-Sky v. Holder, 661 F.3d 1, 48 n. 37 (D. C. Cir. 2011) (Kavanaugh, J., dissenting as to jurisdiction and not deciding the merits) ("[T]he fact that an exaction is not labeled a tax does not vitiate Congress's power under the Taxing Clause."
92. (citing The License Tax Cases, 72 U. S. (5 Wall.) at 471)). Similarly, some federal laws refer to exactions on illegal acts as "taxes", which is misleading because the conduct is illegal. But the Court judges the material characteristics of these exactions without concern for whether they are called legal or illegal.
93. See, e.g., Kurth Ranch, 511 U. S. at 778 ("As a general matter, the unlawfulness of an activity does not prevent its taxation. "
94. (citing Marchetti v. United States, 390 U. S. 39, 44 (1968);
95. James v. United States, 366 U. S. 213 (1961);
96. United States v. Constantine, 296 U. S. 287, 293 (1935))).
97. See, e.g., Nelson v. Sears, Roebuck & Co., 312 U. S. 359, 363 (1941) ("In passing on the constitutionality of a tax law 'we are concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it.'"
98. (quoting Lawrence v. State Tax Comm'n, 286 U. S. 276, 280 (1932)
99. and citing Wisconsin v. J. C. Penney Co., 311 U. S. 435 (1940)
100. and S. Pac. Co. v. Gallagher, 306 U. S. 167, 177 (1939))). Lawrence, in turn, cited a series of earlier decisions for the same proposition.
101. See Lawrence, 286 U. S. at 280
102. (citing Educ. Films Corp. v. Ward, 282 U. S. 379, 387 (1931);
103. Pac. Co. v. Johnson, 285 U. S. 480 (1932);
104. and Shaffer v. Carter, 252 U. S. 37, 54-55 (1920)). These cases involved a variety of constitutional challenges, most notably dormant commerce and due process objections to state exactions. In all of them, the Court stressed the substance of the exaction over its form.
105. See, e.g., United States v. Reorganized CF&I Fabricators, 518 U. S. 213, 220 (1996) (holding in the bankruptcy context that the determination of whether an exaction is a tax requires courts to "look[] behind the label placed on the exaction and rest its answer directly on the operation of the provision⋯").
106. Theories in social science often invoke "ideal types", "stylized facts", or simplified models. See, e.g., Max Weber, "Objectivity" in Social Science and Social Policy, in The Methodology of the Social Sciences 91 (Edward A. Shils & Henry A. Finch eds., 1949).
107. See, e.g., Thomas More Law Ctr. v. Obama, 651 F.3d 529, 551 (6th Cir. 2011) (Sutton, J., concurring in part and delivering the opinion of the court in part) (concluding that the exaction in the Affordable Care Act for remaining uninsured was a penalty because, inter alia, its "central function⋯ was not to raise revenue", but "to change individual behavior by requiring all qualified Americans to obtain medical insurance").
108. See supra Part II (discussing the doctrinal shift from Child Labor Tax Case, 259 U. S. 20 (1922)
109. to Sonzinsky v. United States, 300 U. S. 506 (1937)
110. and United States v. Kahriger, 345 U. S. 22 (1953));
111. see also id. (discussing Mont. Dep't of Revenue v. Kurth Ranch, 511 U. S. 767 (1994)).
112. The primary reason that economists advocate pollution taxes is to change behavior, and the secondary reason is to raise revenues. Taxes on excessive behavior, however, are the ideal means to finance the government because they raise revenues by correcting a distortion in market prices, not by creating one. Cf. United States v. Kahriger, 345 U. S. 22, 35 (1953) (Jackson, J., concurring) ("Congress may and should place the burden of taxes where it will least handicap desirable activities and bear most heavily on useless or harmful ones.").
113. The economist's ideal pollution tax internalizes the social cost of pollution. Such a tax is a "price" to increase the cost of a permitted activity, not a "sanction" to prevent wrongdoing. See Robert Cooter, Prices and Sanctions, 84 Colum. L. Rev. 1523, 1536 (1984).
114. 300 U. S. 506, 514 (1937);
115. accord Kahriger, 345 U. S. at 28 (noting that the exaction under review "produces revenue");
116. United States v. Doremus, 249 U. S. 86, 93-94 (1919) (stating that laws are supported by the tax power only if they bear "some reasonable relation" to the "raising of revenue").
117. Cf. Kahriger, 345 U. S. at 35 (Jackson, J., concurring) ("Of course, all taxation has a tendency, proportioned to its burdensomeness, to discourage the activity taxed. One cannot formulate a revenue-raising plan that would not have economic and social consequences.").
118. See Seven-Sky v. Holder, 661 F.3d 1, 29-30 (D. C. Cir. 2011) (Kavanaugh, J., dissenting as to jurisdiction and not deciding the merits) ("Congress often chooses the label 'penalty' instead of 'tax' because the 'penalty' label suggests violation of a legal rule and thus has a more powerful effect in altering underlying behavior that Congress wants to encourage or discourage."); id. at 30 n. 11 (quoting statements in a 1999 Treasury Department Report that "penalties clearly signal that noncompliance is not acceptable behavior", and that "[i]n establishing social norms and expectations, subjecting the noncompliant behavior to any penalty may be as important as the exact level of the penalty⋯.").
119. See, e.g., United States v. La Franca, 282 U. S. 568, 572 (1931) ("No mere exercise of the art of lexicography can alter the essential nature of an act or a thing; and if an exaction be clearly a penalty it cannot be converted into a tax by the simple expedient of calling it such.").
120. Oliver Wendell Holmes, Law in Science and Science in Law, 12 Harv. L. Rev. 443, 460 (1898-1899) ("We must think things not words, or at least we must constantly translate our words into the facts for which they stand, if we are to keep to the real and the true.").
121. For an examination of the importance of the expressive form of legal regulation in a different area of constitutional law, see generally Robert C. Post & Neil S. Siegel, Theorizing the Law/Politics Distinction: Neutral Principles, Affirmative Action, and the Enduring Legacy of Paul Mishkin, 95 Calif. L. Rev. 1473, 1494-95 (2007);
122. Neil S. Siegel, Race-Conscious Student Assignment Plans: Balkanization, Integration, and Individualized Consideration, 56 Duke L. J. 781, 831, 843 (2006).
123. See United States v. Butler, 297 U. S. 1, 64 (1936) ("The true construction [of the first clause] undoubtedly is that the only thing granted is the power to tax for the purpose of providing funds for payment of the nation's debts and making provision for the general welfare."); see also Cooter & Siegel, supra note 16, at 171-72 ("The tenuous economic distinction between many taxes and regulations⋯ suggests that allowing one and not the other under Clause 1 makes little sense.").
124. See Woods v. Cloyd W. Miller Co., 333 U. S. 138, 144 (1948) ("The question of the constitutionality of action taken by Congress does not depend on recitals of the power which it undertakes to exercise."). The constitutional question remains whether the exaction is a tax. Note, however, that a different situation is presented when Congress explicitly disclaims use of a particular enumerated power. As a matter of institutional deference, it is appropriate for courts to defer to a clearly articulated congressional judgment that an enumerated power is not available or not desirable to justify an Act of Congress. But calling an exaction something other than a "tax" does not by itself amount to explicit disavowal of the tax power, particularly in light of the case law suggesting that substance controls over form.
125. See, e.g., United States v. Morrison, 529 U. S. 598, 618 (2000);
126. United States v. Lopez, 514 U. S. 549, 566 (1995).
127. Cf., e.g., Gonzales v. Raich, 545 U. S. 1, 17 (2005) ("We have never required Congress to legislate with scientific exactitude. When Congress decides that the total incidence of a practice poses a threat to a national market, it may regulate the entire class." (internal quotation marks omitted)).
128. We focus on these three criteria because they connect the characteristics of the exaction to its incentive effects on behavior. Many considerations that are not characteristics of an exaction affect how a person responds to it, such as the person's taste and income. Considerations unconnected to the exaction's character should remain in the background, such as (1) the entity charged with assessing the exaction or similar decisions about the means of implementation; (2) the uses to which the government will put the revenue generated by the exaction; and (3) the location of the exaction in the U. S. Code. Another such example is whether the exaction is imposed only after detection by the police. Although some penalties are imposed only after police detection, others are not. For an instance in which the Court erred by confusing the effects of an exaction with who enforces it, see Tank Truck Rentals, Inc. v. Commissioner, 356 U. S. 30, 36 (1958) (holding that the Commissioner properly disallowed the tax deductibility of payments of several hundred fines imposed on a trucking business for violations of state maximum weight laws because "the truckers were fined by the State as a penal measure when and if they were apprehended by the police."). For an effective critique of the decision as promoting inefficient behavior through the tax code where efficient behavior would accord with the state's goal of obtaining compensation for damage done to its roads
129. see Richard Schmalbeck & Lawrence Zelenak, Federal Income Taxation 536-38 (3d ed. 2011). In addition, the social costs imposed by the conduct subject to an exaction are not relevant to whether the exaction is a tax or a penalty. Purely self-interested people care only about their private costs, not about social costs. Most people care more about their private costs than social costs. An exaction by the state imposes a private cost on a person's conduct. Most people respond by comparing the exaction to their private benefit from the conduct. Grounding a theory of the difference between a tax and penalty on its behavioral consequences requires a focus on private costs and benefits. By contrast, the social costs imposed by certain conduct are relevant to whether the conduct should be regulated by a tax or a penalty. A tax that internalizes social costs causes a self-interested person to do what is best for society, and the inability to design and implement such a tax is an important reason for imposing a penalty.
130. See, e.g., Jack M. Balkin, Fidelity to Text and Principle, in The Constitution in 2020, at 11, 20 (Jack M. Balkin & Reva B. Siegel eds., 2009) ("Many theories of constitutional interpretation conflate two different questions. The first is the question of what the Constitution means and how to be faithful to it. The second asks how a person in a particular institutional setting-like an unelected judge with life tenure-should interpret the Constitution and implement it through doctrinal constructions and applications.").
131. See, e.g., United States v. Morrison, 529 U. S. 598, 607 (2000) ("Due respect for the decisions of a coordinate branch of Government demands that we invalidate a congressional enactment only upon a plain showing that Congress has exceeded its constitutional bounds. With this presumption of constitutionality in mind, we turn to the question whether [the statute] falls within Congress' power under Article I, § 8, of the Constitution. " (citations omitted)).
132. See, e.g., Gonzales v. Raich, 545 U. S. 1, 22 (2005) ("In assessing the scope of Congress' authority under the Commerce Clause, we stress that the task before us is a modest one. We need not determine whether respondents' activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether a 'rational basis' exists for so concluding.").
133. Some exactions are neither taxes nor penalties. For example, there are federal regulations backed by exactions that are called "penalties" by Congress. They are low and lack enhancement, however, so they lack the three material characteristics of pure penalties. See, e.g., 7 U. S. C. § 610 (c) (2006) ("The Secretary of Agriculture is authorized, with the approval of the President, to make such regulations with the force and effect of law as may be necessary to carry out the powers vested in him by this chapter. Any violation of any regulation shall be subject to such penalty, not in excess of $100, as may be provided therein. "). At the same time, they are not well described as taxes because they are so low that they do not raise much revenue. At most, they have one characteristic of pure taxes (dampening behavior). What should exactions be called when neither "penalties" nor "taxes" accurately describes them? "Exactions" may be the best term. Regardless of the label, they need not originate in the House of Representatives.
134. See U. S. Const. art. I, § 7 ("All Bills for raising Revenue shall originate in the House of Representatives⋯.").
135. Oliver Wendell Holmes, The Path of the Law, in Collected Legal Papers 173 (1920);
136. McCulloch v. Maryland, 17 U. S. (4 Wheat) 316, 431 (1819) (stressing that it is a "proposition[] not to be denied" that the "power to tax involves the power to destroy"). Chief Justice Marshall was referring specifically to taxes imposed on the federal government by the states, which are not governments of limited, enumerated powers. We offer a precise formulation of the meaning of "destroy" as "preventing the behavior completely."
137. Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218, 223 (1928) (Holmes, J., dissenting) ("The power to tax is not the power to destroy while this Court sits. The power to fix rates is the power to destroy if unlimited, but this Court while it endeavors to prevent confiscation does not prevent the fixing of rates. A tax is not an unconstitutional regulation in every case where an absolute prohibition of sales would be one."
138. (citing Hatch v. Reardon, 204 U. S. 152, 162 (1907)).
139. 26 U. S. C. § 5000A (a) (Supp. 2011). The minimum coverage provision goes into effect on January 1, 2014. It applies to U. S. citizens and legal residents. It does not apply to undocumented aliens, people in prison, and people with certain religious objections. See id. § 5000A (d).
140. See 42 U. S. C. § 18091 (2) (G) (Supp. 2011) ("62 percent of all personal bankruptcies are caused in part by medical expenses.").
141. See, e.g., Charles Rosenberg, The Care of Strangers: The Rise of America's Hospital System 347 (1995) (observing that "the hospital never assumed the guise of rational and rationalized economic actor during the first three-quarters of the twentieth century"; that it "continued into the twentieth century, as it had begun in the eighteenth, to be clothed with public interest in a way that challenged categorical distinctions between public and private"; and that "[p]rivate hospitals had always been assumed to serve the community at large-treating the needy."); id. at 352 (seeing "little prospect of hospitals in general becoming monolithic cost minimizers and profit maximizers", and predicting that American society "will feel uncomfortable with a medical system that does not provide a plausible (if not exactly equal) level of care to the poor and socially isolated");
142. see also, e.g., Brief for Appellant at 42-43, Virginia ex rel. Cuccinelli v. Sebelius, 656 F.3d 253 (4th Cir. 2011) (Nos. 11-1057 & 11-1058) (discussing state tort law creating liability for failure to provide emergency care).
143. For development of this argument, see generally Neil S. Siegel, Free Riding on Benevolence: Collective Action Federalism and the Minimum Coverage Provision, 75 Law & Contemp. Probs. 29, 33 (2012).
144. See generally Kenneth J. Arrow, Essays in the Theory of Risk Bearing (2d ed. 1974).
145. 42 U. S. C. § 300gg, 300gg-1 (a), 300gg-3 (a), 300gg-11, 300gg-12.
146. See Brief for America's Health Insurance Plans as Amicus Curiae in Support of Neither Party at 3, Virginia ex rel. Cuccinelli v. Sebelius, 656 F.3d 253 (4th Cir. 2011) (Nos. 11-1057 & 11-1058) ("Without an individual mandate requirement, more individuals will make the rational economic decision to wait to purchase coverage until they expect to need health care services. If imposed without an individual mandate provision, the market reform provisions would reinforce this 'wait-and-see' approach by allowing individuals to move in and out of the market as they expect to need coverage, undermining the very purpose of insurance to pool and spread risk.").
147. The mechanism causing such a price spiral was famously modeled by George Akerlof in The Market for "Lemons": Quality Uncertainty and the Market Mechanism, 84 Q. J. Econ. 488 (1970).
148. 132 S. Ct. 2566.
149. U. S. Const. Art. I, § 8, cl. 3.
150. See Mead v. Holder, 766 F. Supp. 2d 16, 35 (D. D. C. 2011);
151. Liberty Univ. v. Geithner, 753 F. Supp. 2d 611, 635 (W. D. Va. 2010);
152. Thomas More Law Ctr. v. Obama, 720 F. Supp. 2d 882, 895-96 (E. D. Mich. 2010);
153. Thomas More Law Ctr. v. Obama, 651 F.3d 529, 544 (6th Cir. 2011);
154. Seven-Sky v. Holder, 661 F.3d 1, 20 (D. C. Cir. 2011).
155. Florida ex rel. Bondi v. U. S. Dep't of Health & Human Servs., 780 F. Supp. 2d 1256, 1306 (N. D. Fla. 2011);
156. Goudy-Bachman v. U. S. Dep't of Health & Human Servs., 811 F. Supp. 2d 1086, 1111 (M. D. Pa. 2011);
157. Virginia ex rel. Cuccinelli v. Sebelius, 728 F. Supp. 2d 768, 788 (E. D. Va. 2010). These district courts reasoned that Congress may regulate only economic activity using its commerce power, and that the minimum coverage provision regulates inactivity-specifically, the failure to purchase health insurance. The United States Court of Appeals for the Eleventh Circuit reasoned similarly in invalidating the minimum coverage provision. Florida ex rel.
158. Att'y Gen. v. U. S. Dep't of Health & Human Servs., 648 F.3d 1235, 1311-13 (11th Cir. 2011).
159. See U. S. Const. art. I, § 9, cl. 4 (contemplating federal power to impose capitation taxes under certain circumstances).
160. Federal law permits married heterosexuals couples to file joint tax returns. If the couple has only one wage earner, filing a joint return usually reduces their total tax liability. Conversely, if the couple has two earners, filing a joint return usually increases their total tax liability. Unmarried individuals in long-term relationships may not file jointly, nor may married gay couples. 26 C. F. R. § 1. 6013-1 (2012).
161. But cf. Liberty Univ. v. Geithner, 671 F.3d 391, 415 (4th Cir. 2011) (Wynn, J., concurring) ("[W]ere I to reach the merits, I would uphold the constitutionality of the Affordable Care Act on the basis that Congress had the authority to enact the individual and employer mandates under its plenary taxing power."). In two decisions, the United States Court of Appeals for the Fourth Circuit ruled for the federal government on jurisdictional grounds. See id. at 414-15 (holding that the federal tax Anti-Injunction Act bars the action);
162. Virginia ex rel. Cuccinelli v. Sebelius, 656 F.3d 253, 266, 272 (4th Cir. 2011) (holding that Virginia lacks Article III standing to bring the action). Unlike Judge Wynn, Judge Motz, who wrote both opinions, did not express her view of the merits. Judge Davis would have upheld the individual and employer mandates under the Commerce Clause.
163. See Geithner, 671 F.3d at 452 (Davis, J., dissenting).
164. Thomas More Law Ctr. v. Obama, 651 F.3d 529, 550 (6th Cir. 2011) (Sutton, J., concurring in part).
165. Id. at 552 (discussing, inter alia, Child Labor Tax Case, 259 U. S. 20, 38 (1922)
166. and Dep't of Revenue of Mont. v. Kurth Ranch, 511 U. S. 767, 779 (1994)).
167. See Florida ex rel. Att'y Gen. v. U. S. Dep't Health & Human Servs., 648 F.3d 1235, 1314 (11th Cir. 2011) ("Beginning with the district court in this case, all have found, without exception, that the individual mandate operates as a regulatory penalty, not a tax." (citing cases)).
168. 26 U. S. C. § 5000A (a) (Supp. 2011).
169. Id. at § 5000A (b), (c); see Liberty Univ. v. Geithner, 671 F.3d 391, 424 (4th Cir. 2011) (Davis, J., dissenting) ("And Congress did not simply use the term 'penalty' in passing: Congress refers to the exaction no fewer than seventeen times in the relevant provision, and each time Congress calls it a 'penalty.'").
170. Geithner, 671 F.3d at 424 (Davis, J., dissenting) ("Congress considered earlier versions of the individual mandate that clearly characterized the exaction as a 'tax' and referred to it as such more than a dozen times. Congress deliberately deleted all of these references to a 'tax' in the final version of the Act and instead designated the exaction a 'penalty.'" (citations omitted)).
171. Cf., e.g., Geithner, 671 F.3d at 418 (Wynn, J., concurring) ("Notably, while the individual mandate in some places used the term 'penalty', some form of the word 'tax' appears in the statute over forty times.");
172. Brian Galle, The Taxing Power, the Affordable Care Act, and the Limits of Constitutional Compromise, 120 Yale L. J. Online 407, 409(2011), available at http://yalelawjournal.org/2011/4/5/galle.html (stressing these facts in arguing that the exaction is a tax).
173. Cong. Budget Office, Effects of Eliminating the Individual Mandate to Obtain Health Insurance, June 16, 2010, http://www.cbo.gov/sites/default/files/ cbofiles/ftpdocs/113xx/doc11379/eliminate-individual-mandate-06-16.pdf (predicting that elimination of the individual mandate to obtain coverage "would increase the number of uninsured by about 16 million people").
174. 26 U. S. C. § 5000A (c) (1) (B), (b) (1), (c) (2) (B).
175. See, e.g., Alec MacGillis, The Individual Mandate: How It Will Work, in The Staff of the Washington Post, Landmark: The Inside Story of America's New Health-Care Law and What It Means for Us All 89 (2010) ("[T]he law expressly states that failure to pay the penalties will not result in criminal prosecution or even in property liens. Also, the government probably will enforce the mandate loosely because of the political sensitivity of the health-care law.").
176. Experts fear that the existing exaction may be too low to prevent a significant percentage of individuals from delaying the purchase of insurance, which could threaten the viability of the insurance business. See, e.g., id. ("[T]hose who wrote the legislation set the penalty for not carrying health coverage lower than what many health-care experts believe is necessary for the mandate to work, precisely because they were worried about the political fallout from making the requirement seem too onerous."); Editorial, Curing a Sick System: The 'Individual Mandate' is Divisive, But It's Also a Crucial Component of Healthcare Reform, L. A. Times, Oct. 24, 2010, at A39, available at http://articles.latimes.com/2010/oct/24/opinion/la-ed-health-20101024 ("By requiring all adult Americans and legal residents to obtain a basic level of coverage or else pay an annual tax penalty of up to $2, 085, the law seeks to deter people from signing up for insurance only after they need expensive care. It's not the only approach Congress could have taken, and it isn't perfect-the penalty seems too low to stop healthy people from going without coverage or employers from ceasing to offer health benefits to their employees.").
177. Cong. Budget Office, Payments of Penalties for Being Uninsured Under the Patient Protection and Affordable Care Act, Apr. 22, 2010, http://www.cbo.gov/ sites/default/files/cbofiles/ftpdocs/113xx/doc11379/individual-mandate-penalt ies-04-22.pdf [hereinafter Cong. Budget Office, Payments of Penalties] (reporting that "[i]n total, about 4 million people are projected to pay a penalty because they will be uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf) ").
178. Cong. Budget Office, Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act, Table 2, Mar. 2012, http://www.cbo.gov/ sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdf [hereinafter Cong. Budget Office, Updated Estimates].
179. Liberty Univ. v. Geithner, 671 F.3d 391, 411 n. 12 (4th Cir. 2011)
180. (citing Florida ex rel. McCollum v. U. S. Dep't of Health and Human Servs., 716 F. Supp. 2d 1120, 1142-43 (N. D. Fla. 2010)). Ironically, Congress tried to diminish political objections by using the name that signals more coercion ("penalty"), instead of the one that signals less coercion ("tax").
181. See, e.g., Florida ex rel. McCollum v. U. S. Dep't of Health & Human Servs., 716 F. Supp. 2d 1120, 1143 (N. D. Fla. 2010) ("[N]ow that it has passed into law⋯, government attorneys have come into this court and argued that it was a tax after all. This rather significant shift in position, if permitted, could have the consequence of allowing Congress to avoid the very same accountability that was identified by the government's counsel in the Virginia case as a check on Congress's broad taxing power in the first place." (citations omitted));
182. Randy E. Barnett, Commandeering the People: Why the Individual Health Insurance Mandate is Unconstitutional, 5 N. Y. U. J. L. & Liberty 581, 632 (2010) ("The public is acutely aware of tax increases. Rather than incur the political cost of imposing a general tax on the public using its tax powers, economic mandates allow Congress and the President to escape accountability for tax increases by compelling citizens to make payments directly to private companies.").
183. Federal commandeering of states raises different constitutional questions. See Printz v. United States, 521 U. S. 898 (1997);
184. New York v. United States, 505 U. S. 144 (1992). With commandeering, the federal government is regulating individuals indirectly by requiring the states to regulate on its behalf. With a purchase mandate or incentive, the federal government is regulating individuals directly and so does not implicate any structural concern.
185. Seven-Sky v. Holder, 661 F.3d 1, 48 n. 36 (D. C. Cir. 2011) (Kavanaugh, J., dissenting as to jurisdiction and not deciding the merits) (quoted supra note 142). Like the Fourth Circuit
186. see supra note 195, Judge Kavanaugh would have held the action barred by the federal Tax Anti-Injunction Act ("TAIA"), 26 U. S. C. § 7421 (a) (2006). For a novel explanation of why the TAIA imposed no jurisdictional impediment
187. see generally Michael C. Dorf & Neil S. Siegel, "Early-Bird Special" Indeed!: Why the Tax Anti-Injunction Act Permits the Present Challenges to the Minimum Coverage Provision, 121 Yale L. J. Online 389(2012), available at http://yalelawjournal.org/images/pdfs/1042.pdf.
188. For a discussion, see generally Susan Rose-Ackerman, Judicial Review and the Power of the Purse, 12 Int'l Rev. L. & Econ. 191 (1992). Professor Rose-Ackerman offers proposals that "aim to improve the accountability of Congress to the voters⋯by limiting Congress's ability to make low-visibility deals through the appropriations process⋯ [and by deterring] Congress from passing ambitious-sounding laws that it has no intention of funding adequately." Id. at 192.
189. Some sections of the Internal Revenue Code mislabel penalties as taxes, notably the rules regarding private foundations. Among other things, a foundation must distribute at least five percent of its assets for charitable purposes each year; it must not engage in acts of self-dealing with foundation insiders; it must not hold more than insubstantial interests in corporate or noncorporate businesses; and (with few exceptions) it must not lobby. These rules, however, are not phrased as mandates or prohibitions. Rather, a foundation can do what it wants, but must pay "excise taxes" if it chooses wrong. For example, section 4941 (a) imposes a first-tier tax of ten percent on any self-dealing transaction. 26 U. S. C. § 4941 (a) (2006). Section 4941 (b) imposes a two hundred percent tax on any act of self-dealing subject to the tier-one tax, if the act that triggered the tax is not "corrected" in a timely fashion. Id. § 4941 (b). The first-tier tax grabs attention and the second-tier tax prevents wrongdoing if the foundation does not fix the problem. Unsurprisingly, these "taxes" raise negligible revenue.
190. To preserve federalism values, the Court needs to distinguish between taxes and penalties. The direct approach of distinguishing between them on the merits can succeed because a substantial theory lies behind the difference, as this Article shows. In other areas of constitutional law, the Court may seek to preserve federalism values by avoiding substantial distinctions, imposing a clear statement rule, and allowing legislative politics to take its course. After South Dakota v. Dole, 483 U. S. 203(1987), the Court may have believed that imposing a clear statement requirement in conditional spending cases was the most judicially manageable way to enforce federalism values.
191. Cf. Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U. S. 291 (2006). (The Medicaid holding in NFIB may reveal a different belief, but that is a subject for a future paper.) Similarly, imposing a clear statement requirement for a suspension of habeas corpus by Congress may enable courts to avoid profound and perplexing questions about justiciability and the merits.
192. See, e.g., Boumediene v. Bush, 553 U. S. 723 (2008). Whatever one thinks about the spending power or habeas suspensions, the best approach in the tax context is for the Court to distinguish between a tax and a penalty.
193. It may be easier to identify instances in which Congress calls a penalty a "tax" than it is to find situations in which Congress labels a tax a "penalty." The shared responsibility payment is unusual in this regard. But cf. United States v. Sotelo, 436 U. S. 268, 275 (1978) ("We⋯ cannot agree⋯ that the 'penalty' language of Internal Revenue Code § 6672 is dispositive of the status of respondent's debt under Bankruptcy Act § 17a (1) (e)⋯. That the funds due are referred to as a 'penalty' when the Government later seeks to recover them does not alter their essential character as taxes for purposes of the Bankruptcy Act⋯.").
194. Seven-Sky v. Holder, 661 F.3d 1, 48 (D. C. Cir. 2011) (Kavanaugh, J., dissenting as to jurisdiction and not deciding the merits).
195. Seven-Sky, 661 F.3d at 48 n. 38;
196. see Brief for Petitioners (Minimum Coverage Provision) at 61, Dep't of Health & Human Servs. v. Florida, 132 S. Ct. 2566 (2012) (No. 11-398) ("[N]either the Treasury Department nor the Department of Health and Human Services interprets Section 5000A as imposing a legal obligation on applicable individuals independent of its tax-penalty consequences; each instead views it as only a predicate provision for the imposition of tax consequences.").
197. See, e.g., The License Tax Cases, 72 U. S. (5 Wall.) 462, 471-72 (1867) (discussed supra note 142).
198. See, e.g., Nw. Austin Mun. Util. Dist. No. One v. Holder, 557 U. S. 193, 197 (2009). Citing Northwest Austin, Judge Kavanaugh wrote that "perhaps the canon of constitutional avoidance would allow" the interpretation that non-compliance with the minimum coverage provision is lawful, thereby "squeeze[ing] it within the Taxing Clause."
199. Seven-Sky, 661 F.3d at 48 n. 38.
200. 132 S. Ct. 2566 (2012).
201. See, e.g., Randy Barnett, Roberts Decision Didn't Open Floodgates for 'Compulsion Through Taxation', The Wash. Examiner, July 5, 2012, http://washingtonexaminer.com/roberts-decision-didnt-open-floodgates- forcompulsion-through-taxation/article/2501386 ("[T]hese maneuvers made constitutional law worse, even if they did save this law in hope of avoiding political attacks on the court.").
202. NIFB, 132 S. Ct. at 2595.
203. See id. at 2599-600 ("We have nonetheless maintained that 'there comes a time in the extension of the penalizing features of the so-called tax when it loses its character as such and becomes a mere penalty with the characteristics of regulation and punishment.'" (quoting Dep't of Revenue of Mont. v. Kurth Ranch, 511 U. S. 767, 779 (1994)); id. at 2600 ("We have already explained that the shared responsibility payment's practical characteristics pass muster as a tax under our narrowest interpretations of the taxing power. Because the tax at hand is within even those strict limits, we need not here decide the precise point at which an exaction becomes so punitive that the taxing power does not authorize it. It remains true, however, that the 'power to tax is not the power to destroy while this Court sits.'" (citations omitted) (quoting Okla.
204. Tax Comm'n v. Tex. Co., 336 U. S. 342, 364 (1949))); id. ("We do not make light of the severe burden that taxation-especially taxation motivated by a regulatory purpose-can impose. But imposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice.").
205. See id. at 2595 ("Congress often wishes to punish only those who intentionally break the law."). Morality and law connect scienter and wrongdoing by penalizing intentional wrongdoing and not accidental harm; cf. id. at 2596-97 ("In distinguishing penalties from taxes, this Court has explained that 'if the concept of penalty means anything, it means punishment for an unlawful act or omission.' While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS." (citations omitted) (quoting United States v. Reorganized CF&I Fabricators of Utah, 518 U. S. 213, 224 (1996))).
206. See NFIB, 132 S. Ct. at 2593-94, 2600-01. He wrote: JUSTICE GINSBURG questions the necessity of rejecting the Government's commerce power argument, given that §5000A can be upheld under the taxing power. But the statute reads more naturally as a command to buy insurance than as a tax, and I would uphold it as a command if the Constitution allowed it. It is only because the Commerce Clause does not authorize such a command that it is necessary to reach the taxing power question. And it is only because we have a duty to construe a statute to save it, if fairly possible, that §5000A can be interpreted as a tax. Id. at 2600-01 (citation omitted). Roberts also wrote that "[t]he Government asks us to interpret the mandate as imposing a tax, if it would otherwise violate the Constitution. " Id. at 2594. That is inaccurate. The Government argued that the tax power provides an independently sufficient basis for upholding the minimum coverage provision. Brief for Petitioners (Minimum Coverage Provision) at 52
207. Dep't of Health & Human Servs. v. Florida, 132 S. Ct. 2566 (2012) (No. 11-398,) ("The minimum coverage provision is independently authorized by Congress's tax power.").
208. The modern canon of constitutional avoidance does not license, let alone require, a judge to first conclude that the minimum coverage provision is beyond the scope of the Commerce and Necessary and Proper Clauses before concluding that the provision may reasonably be characterized as a tax. For a discussion, see generally Neil S. Siegel, More Law than Politics: The Chief, the "Mandate", Legality, and Statesmanship, in The Health Care Case: The Supreme Court's Decision and Its Implications (Gillian Metzger, Trevor Morrison & Nathaniel Persily eds., forthcoming 2013).