Has Any Crazy Taxpayer Group Cited NFIB for the Proposition that the Failing To Pay A Tax Cannot Make One A Lawbreaker?

January 9th, 2013

During his hand-down of the opinion, Chief Justice Roberts said:

It is indeed likely that many Americans will choose to pay the IRS rather than buying insurance and someone who makes that payment has fully complied with the law.

He has not done anything unlawful.

The Solicitor General confirm that understanding in his briefs and at oral argument.

And this passage in particular from the opinion:

Third, although the breadth of Congress’s power to tax is greater than its power to regulate commerce, the taxing power does not give Congress the same degree of control over individual behavior. Once we recognize that Congress may regulate a particular decision under the Commerce Clause, the Federal Government can bring its full weight to bear. Congress may simply command individuals to do as it directs. An individual who disobeys may be subjected to criminal sanctions. Those sanctions can include not only fines and imprisonment, but all the attendant consequences of being branded a criminal: deprivation of otherwise protected civil rights, such as the right to bear arms or vote in elections; loss of employment opportunities; social stigma; and severe disabilities in other controversies, such as custody or immigration disputes.

By contrast, Congress’s authority under the taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more. If a tax is properly paid, the Government has no power to compel or punish individuals subject to it. 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.11

FN 11 Of course, individuals do not have a lawful choice not to pay a tax due, and may sometimes face prosecution for failing to do so (although not for declining to make the shared responsibility payment, see 26 U. S. C. §5000A(g)(2)). But that does not show that the tax restricts the lawful choice whether to undertake or forgo the activity on which the tax is predicated. Those subject to the individual mandate may lawfully forgo health insurance and pay higher taxes, or buy health insurance and pay lower taxes. The only thing they may not lawfully do is not buy health insurance and not pay the resulting tax.

And what if the tax is not “properly paid.” What powers can the Government bring to bear in such cases?

FN11, which seems to have been added on during an “oh crap we can’t legalize failing to pay taxes” moment, seems to say people don’t have the choice to pay a tax that is already due, and can be criminally prosecuted for failing to do so, though not the shared responsibility payment (there was a statutory carveout for failing to pay this tax).

However, the second sentence is giving me a lot of angst. “But that does not show that the tax restricts the lawful choice whether to undertake or forgo the activity on which the tax is predicated.” Is this placing a limitation on the taxing power on whether the person engaged in activity or not? In other words, did Roberts import the activity/inactivity distinction into his saving construction of the taxing power? So Congress can impose a tax on inactivity, but can’t force people to pay it? Am I read this right? I am not an expert in tax law, so I may be off base.

But then the final three sentences in the footnotes seems to say a person may not avoid buying health insurance, and not the pay the tax. But what happens if a person does that? What happens if a person decides not to buy insurance, and decides not to pay the penalty? Assume the ACA’s prosecutorial carveout was not in the case. What punishment can the government mete out? Nothing? Can the government not punish such a person? Am I reading this right?

Wesley Snipes, call me maybe.