ObamaCare ruling destroys perfectly good teaching tool for tax professors
Published June 29, 2012
And he wasn't kidding.
Within those 5 minutes are little sparks of knowledge. They originate from a good teacher who imparted upon us something so simple yet profound that it made an indelible mark on our memory, causing us to never forget it.
One of these sparks I recall from law school came from a professor who taught his students how to identify when a tax occurs: “A tax occurs on a transfer of money. Picture a government hand. There are times when a buyer transfers money to a seller, interrupted by the government hand grabbing the money in the middle, taking out its share then handing the balance to the seller.”
This definition of a tax occurring only on a transfer of money has served me well because the definition has never failed me.
A review of Black’s Law Dictionary’s definition of tax shows a variety of taxes, all of them first requiring a transfer of money or value: Income tax, payroll tax, consumption tax, estate tax, capital gains tax, gift tax, franchise tax, gross receipts tax, severance tax, tariffs, excise taxes on fuel, liquor and cigarettes, licenses and surcharges all involve obvious transfers of money.
User fees tax the transfer to the consumer of that which is being used.
Ad Valorem taxes in manufacturing are levied upon the transfer of a product whose value has been increased.
Even real estate taxes, a form of ad valorem, occur when realty is transferred (though more insidious than others in that the transfer is then taxed each year, the amount of tax rising and falling with the value of the property which is tied to the transfer of money being gained or lost). Real estate taxes are also user fees assessed for the transfer of benefits like snow removal, garbage removal, etc.
Every tax has at its core the prerequisite of a transfer of money or value.
Thanks to the ObamaCare ruling, not transferring money or value may now be taxed, the precise opposite of what a tax has been in the history of jurisprudence.
The dissent laments the scant words used by Chief Justice Roberts on the issue, and all that can be found is the following, surely to win this year’s circuitous argument award:
In other words, Congress did it, therefore we assume they can do it. Can you say, unchecked power?“Sustaining the mandate as a tax depends only on whether Congress has properly exercised its taxing power to encourage purchasing health insurance, not whether it can.” [Emphasis in the original]
What is left out of that analysis is what a tax “is.” Let’s break Roberts' argument down. The question of “whether Congress properly exercised its taxing power” was answered in the affirmative by the Chief Justice based upon nothing more than the collection agent being the IRS. As the Chief Justice said specifically, he is not deciding the issue of whether Congress “can” do this; he’s merely recognizing they did.
Why leave open the issue of whether the Congress “can” do this? Because that would require defining what a tax “is.” This clearly not being a tax (as Roberts ironically finds in the first part of the decision to avoid the Anti-Injunction Act) the answer would have been that Congress clearly “cannot” do what they did. Roberts’ reasoning can be stated thusly: “Congress did it, therefore it is done.”
The most succinct words from the dissent about this is an affirmation that what Congress and the Chief Justice have done has never been done before, centered on this being a penalty not a tax (exactly as the Obama administration contended, and as Roberts found in the beginning of this schizophrenic decision that finds on one issue this is a penalty an on another issue it is a tax):
While the definition of tax and how to identify a tax has now been set upon its head, far more damage has been done to individual liberty.We never have classified as a tax an exaction imposed for violation of the law, and so too, we never have classified as a tax an exaction described in the legislation itself as a penalty.
Congress may now tax you for not doing what it wants you to do. Somehow, that’s not a penalty so long as the IRS collects the money. It is a tax.
The Democrats who constructed this new power suffer from the “Good King” delusion. They see their ends – universal health care – as so good that it justifies giving themselves the power to retard liberty and direct individual behavior.
The problem, of course, is never with the “Good King,” rather the “Next King.” What sort of behavior will the Next King, the one we don’t know yet, compel us to do with this new power to direct our behavior against our will?
Tommy De Seno is editor of JustifiedRight.com and is a practicing attorney. He writes frequently for Ricochet.com.