Unless I missed some language, the Supreme Court’s ruling on ObamaCare shirks the responsibility of explicitly defining exactly what sort of tax Congress has imposed and how similar taxes might be structured in the future. Still, a thread can be followed.
Having just read through the tax-related sections of the ruling, and although the logic is as incoherent and slave to convenience as any I’ve ever read, it seems to me that a straightforward conclusion can be drawn.
First, on the incoherence: The health insurance mandate is apparently not a tax for determining the standing of the suit, but it is a tax to save the law. It’s not a capitation tax — “a tax that everyone must pay simply for existing” — for the purpose of evading the constitutional requirement that such taxes be apportioned by state, but it’s like a capitation tax for the purpose of evading precedent that prevents taxation from being used as stealth regulation. Bob and weave; whatever form it has to take to pass each obstacle.
However, in writing his opinion, Supreme Court Chief Justice John Roberts makes a big deal about the fact that people with no income tax burden do not have to pay the tax: “It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code.” Later, he likens it to a tax incentive.
The only way all of this makes coherent sense (which may be too high a standard for the highest court, granted) is if one takes the ruling a step farther to determine what sort of tax it is. I’d propose that the ObamaCare tax is effectively a capitation tax or a property tax on one’s body.
Conceived as such, it is inherently apportioned across states by population, because every American is assessed the tax evenly in the amount described. But then those who (A) purchase health insurance or (B) fall below certain income thresholds receive an income tax credit in the amount of the ObamaCare tax, thus cancelling it out.
Where this leaves the new form of taxation for the future only time, politics, and litigation will tell. That said, understanding exactly what Congress has created will be critical during debates about repeal, as well as debates about whether to follow or close off this path for future policies.