ObamaCare and the Constitution: Taxation Clause

Stephen Kershnar

The Supreme Court Labels ObamaCare a “Tax”

Dunkirk-Fredonia Observer

July 9, 2012

In National Federation of Independent Business v. Sebelius, 567 U.S. _____ (2012), the Supreme Court found by a 5-4 decision that the individual mandate at the center of ObamaCare (Patient Protection and Affordable Care Act) is constitutional. The mandate requires most Americans to maintain a minimum health-insurance coverage. People who do not receive health insurance coverage through an employer or government program or who were not exempt will have to pay money to the Internal Revenue Service (IRS). The Court faced the issue of whether it was permitted by the relevant parts of the Constitution, specifically, Article I Section 8’s Commerce Clause, Necessary and Proper Clause, and Taxation Clause and the Direct Tax provision in Article I Section 9.

Chief Justice Roberts found that were the mandate a penalty, it would be unconstitutional because the Commerce Clause does not allow the federal government to penalize inaction as a way of regulating commerce. However, were the mandate a tax, he argued, the Taxation Clause would allow it. The issue, then, was whether the mandate was a tax or penalty.

Roberts began by arguing that when a statute is ambiguous and one interpretation violates the Constitution the other not, the courts should adopt the latter. Furthermore, he claimed, the test is not whether the most natural reading of the statute is constitutional. Rather, on his account, the test is whether any plausible interpretation (“fairly possible”) is constitutional.

Roberts then argued that the mandate is a constitutionally permissible tax rather than a constitutionally impermissible penalty. He gave three reasons for his conclusion. First, the price of the payment is not so high that Americans have no choice but to buy health insurance. Second, the payment is not limited to intentional rule-breaking as is characteristic of criminal penalties. Third, the payment is collected by the IRS as a normal means of taxation.

Roberts reasoning is weak. First, as New York University law professor Richard Epstein points out, there is no clear boundary at which required payment changes from a tax to a penalty. In fact, as University of Chicago law professor Richard Posner further points, some criminal fines are quite small. Consider, for example, parking tickets.  

Second, the criminal law is littered with strict-liability offenses. It is simply not true that the criminal law is limited to intentional acts. Environmental crimes are an example.

Third, Epstein notes, Congress should not be allowed to insulate otherwise unconstitutional legislation merely by having the IRS rather than some other department process the fine. Congress shouldn’t be able to eliminate unwanted speech (for example, flying a confederate flag) or handguns by requiring people who do or own these things to pay money to the IRS. In addition, as the dissenters (Justices Scalia, Kennedy, Thomas, and Alito) point out, the IRS alone does not handle the mandate. The Departments of Health and Human Services and Veterans Affairs also have a role. Their involvement would be bizarre were the mandate a tax.

Roberts bolstered his argument by noting that the mandate has a number of tax-like features. It is paid to the treasury when taxpayers pay their taxes, it exempts low income individuals, the amount is affected by standard features (for example, taxable income and number of dependents), the requirement to pay is found in the IRS code, and it provides the government with revenue. However, Epstein and the dissenters point out that several of these features are also found in the criminal law. For example, under federal law federal courts are instructed to consider a party’s ability to pay when imposing a fine. And, obviously, all fines provide revenue for the government.

The conservative dissenters tore into Roberts’ reasoning. They began by pointing out that both precedent and a proper understanding of the concepts make it clear that penalties and taxes are mutually exclusive. That is, a penalty is not a tax and vice versa. In deciding what the requirement is, they argued that while the Court should look at the “fair meaning” of the statute, it may not rewrite it. The dissenters then argued that the fair meaning leads to the conclusion that the mandate is a penalty. This is true whether you look at conceptual arguments, statutory language, or precedent.  

Consider the conceptual argument. A penalty is a punishment (a fine in this context) for an unlawful act. It is clear that the minimum-coverage rule is a legal requirement and the failure to satisfy it is an unlawful omission. The statute is littered with the word “requirement.” In addition, the statute exempts some people from the payment, but not the mandate. This makes sense only if the failure to pay were an unlawful act. The nail in the coffin is that Congress considered and rejected a version of the Act that imposed a tax rather than a requirement-with-penalty.

In a feature of the decision that will make Roberts’ argument live in infamy, he argued that the same features of the statute’s text that make it a tax for the purpose of the Taxation Clause show that it is not a tax for the purpose of whether the Court had the power to hear the case (Anti-Injunction Act). The dissent spit out its disapproval and said that this reasoning “carries verbal wizardry too far, deep into the forbidden land of the sophists.”

Consider statutory language. The dissenters point out that the Act repeatedly labels the required payment a “penalty.” It does so eighteen times and never – absolutely never – labels it a “tax.” Neither the mandate nor the required payment are even located in the revenue section of the statute.  

Consider precedent. The dissenters note that in the past, the Court always treated money payments for violating the law as a penalty and never as a tax. Until Robert’s decision, no federal court – absolutely none – had accepted the notion that the mandate in question was a tax.

This decision in effect killed much of what was left of the limits on federal power. The courts will now allow Congress to coerce Americans on almost any decision that does not directly infringe on rights narrowly laid out in the Bill of Rights. It could force citizens to buy new cars or purchase broccoli by “taxing” those who fail to do so. In essence, Roberts and the liberal justices have determined that the federal government may now do things indirectly, using taxation, which it may not do directly. In contrast, consider the view of the father of the Constitution, James Madison. In the Federalist Papers he said, “The powers delegated by the proposed Constitution to the federal government, are few and defined.” This view and the accompanying Constitutional language are tossed out like soiled newspapers.  

This is the same Obama administration that claimed that without a warrant, the Constitution permitted the federal government to track any and all Americans’ cars via GPS technology. The administration recently decided to ignore the law regarding illegal aliens and to hide from Congress documents on a gun-running program gone awry. The Obama administration went to war against Libya without Congress declaring, authorizing, or even funding the war. To paraphrase T.S. Elliot, this is how a Constitution ends: not with a bang but a whimper. 

Obama's Amnesty: Poor Choices / Mediocre Immigrant Pool

Stephen Kershnar

Temporary Amnesty: Neither Wise Nor Compassionate

Dunkirk-Fredonia Observer

June 26, 2012

            On January 15, 2012, President Obama passed a temporary amnesty for younger illegal aliens. One hopes that in the upcoming election his opponent will make it, along with Obama’s push for more race preferences, an albatross around Obama’s neck.

            Obama’s policy is to allow illegal aliens who meet certain conditions to get a two-year deferral from deportation and apply for a work permit. Specifically, his policy is that the nation’s immigration laws shall not be enforced against illegal aliens who, among other conditions, came to the U.S. under the age of 16, have continuously resided in the U.S. for at least five years, are currently in school or have a general education development certificate (GED) or graduated from high school or worked in the military, have not been convicted of a felony, serious misdemeanor, or multiple misdemeanors, and are younger than 31. According to CNN, the administration claims that it will potentially amnesty 800,000 people. Others claim that it could affect far more.    

            A little context is helpful here. The Pew Hispanic Center estimates that there are 11.5 million illegal aliens (2011 number). This population exploded by 27% between 2000 and 2009.

This population tends to suck up welfare like a vacuum. Steven Camarota writing for the Center for Immigration Studies notes that in 2009, households headed by immigrants (legal and illegal) with children were 46% more likely to use welfare than native households with children (57% versus 39%). Immigrant households with children are also increasingly on welfare usage (18% increase since 2001).

Some immigrant groups are more likely to be on welfare than others. According to Camarota, 75% of Mexican and Guatemalan immigrant households with children are on welfare. In contrast, similar households from immigrants elsewhere were less likely to be on it. Consider these immigrant households: United Kingdom (7%), India (19%), Canada (23%), and Korea (25%). This matters because the Pew Hispanic Center reports that 58% of illegal aliens are from Mexico.

Welfare usage is more frequent for households headed by an immigrant who did not graduate from high school (80% are on welfare). The high rate on welfare is not explained by an unwillingness to work. In 2009, 95% of immigrant households had at least one worker. Nor is the high use affected much by how long the immigrants have been in America. 55% of households headed by immigrants who arrived before 2000 are on welfare, whereas 60% who arrived after were on it. The welfare programs include supplemental social security income (SSI), temporary assistance to needy children (TANF), Women, Infants, and Children food program (WIC), free/reduced school lunch, food stamps, Medicaid (health insurance for the poor), public housing, and rent subsidies.

In education, we see a similar pattern. Hispanic immigrants as a group do not do well at school. According to the Richard Fry of the Pew Hispanic Center, more than half of Hispanic immigrants do not have a high school diploma. According to USA Today, 13% of Hispanics have a college degree versus 30% for the overall population. Educational underperformance is a problem for the Hispanic non-immigrant population as well as the immigrant one.

Similar problems occur with incarceration and out-of-wedlock births. According to 2007 Bureau of Justice statistics, Hispanics (both immigrants and non-immigrants) were 31% of federal inmates and 19% of state inmates. It should be noted that as Ron Unz points out, the population’s crime numbers are heavily affected by demographics, so there is a controversy as to whether this population is more involved in crime. Still, those numbers are troubling. In a 2006 article in City Journal, Heather MacDonald points out that Hispanics are far more likely to have out-of-wedlock children than whites or Asians (46% versus 24% and 15%). She argues that this is a problem as children born out of wedlock are more likely to be juvenile delinquents, use welfare, fail in school, and get pregnant as teenagers.

Obama’s temporary amnesty has been criticized for a number of reasons. First, the policy is unconstitutional as the President cannot change the country’s immigration laws without Congressional approval. Second, the policy will encourage more illegal aliens to come across the country. Third, it will harm unskilled American workers as we legalize an ocean of competitors. Fourth, this program will be quickly converted to one in which the same illegal aliens will be given citizenship.   

The more important criticisms are that this policy harms current citizens and is not especially compassionate. Given the above numbers, it is hard to see how incentivizing this population to stay will benefit American citizens. Worse, the opportunity costs here are enormous. In letting in this group rather than taking in the most talented immigrants from across the world, the country passes up on the incredibly talented entrepreneurs, scientists, professionals, and others who would greatly add to Americans’ lives. For example, Silicon Valley is a major engine of the American high-tech world and it is awash in highly skilled Indian immigrants. The Ivy League is packed with students whose ancestry is from East Asia (China, Japan, and Korea). If we must take in 800,000 immigrants, and the number is likely much higher, why not take the cream of the crop from these countries and elsewhere. There are many talented Hispanics from Central and South America. It makes no sense to welcome those who snuck in rather than those who are especially bright or accomplished. 

Nor is this policy particularly compassionate. Rather than direct American resources toward people who are starving, homeless, or plagued by violence, Obama has chosen to target American resources toward a group that stands a decent chance of being able to make a living and succeed elsewhere. As far as countries go, Mexico is not that poor (its per capital income is the 63^rd in the world according to an IMF 2010-2011 ranking) and these moderately talented illegal aliens are not an especially vulnerable population. If we must take in 800,000 immigrants on the basis of compassion, why not take in the poorest or most vulnerable (for example, Sudanese refugees or victims of misogynistic Middle Eastern policies). Worse, the compassion comes at the expense of the most vulnerable Americans (unskilled and uneducated workers). As usual, the cost of compassion is dump on the already overburdened American taxpayer without any attempt to lessen the burden elsewhere.

The U.S. is like an elite college (for example, Cornell University) with large numbers of students trying to get in. Rather than taking in the best and the brightest, thereby benefitting other students and alumni, or the poorest and most desperate, thereby helping the worst off, it has chosen to admit mediocre students. This is neither wise nor compassionate. It’s just dumb.

Right to Privacy: Fourth Amendment

Stephen Kershnar
United States v. Jones (2012): The Fourth Amendment is Still Alive
Dunkirk-Fredonia Observer
June 12, 2012


A Supreme Court decision, U.S. v. Jones, 565 U.S. ____ (2012), in January 2012 signals the upcoming war on privacy. The Obama Administration in effect claimed that it could put a tracking device on any American’s car and track it indefinitely and without a warrant. Thankfully, the Supreme Court unanimously rejected this idea.

The defendant, Antoine Jones, owned a nightclub in the District of Columbia. The FBI and DC police suspected him of drug trafficking. They initially got a warrant to track his Jeep Grand Cherokee, but the warrant ran out. After it ran out, the police agencies put a GPS tracking device on the bottom of his car and via satellite tracked its movement for the next 28 days. The government used the GPS information to connect Jones to a stash house that stored $850,000 in cash and 97 kilograms of cocaine. The trial court sentenced him to life imprisonment. The federal appellate court in the District of Columbia reversed, finding that the conviction rested on a warrantless search using the GPS device and that such a search violated the Fourth Amendment.

The Fourth Amendment says, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrant shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

The Supreme Court held that the government’s attachment of the GPS device to the vehicle and its use of the device to monitor the vehicle’s movements, constituted a search under the Fourth Amendment. It reasoned that a car was an “effect” and the government’s physical intrusion onto it was therefore a search. It noted that at the time the Amendment was adopted, intruding on such physical property would have been considered a search.

Justice Scalia writing for the majority of the Court (along with Justices Thomas, Roberts, Kennedy, and Sotomayor) argued that for the purposes of the Fourth Amendment, there were two different cases in which government information-gathering is a search that requires a warrant. One case occurs when the government physically intrudes onto someone’s body or property. A second case occurs when the government information-gathering violates a person’s reasonable expectation of privacy. This second line follows a famous case, Katz v. United States, 389 U.S. 347 (1967). In that case, the FBI put an eavesdropping device outside a public phone booth. The government claimed that it didn’t violate the Fourth Amendment because it neither intruded on Katz’s property nor physically intruded into the phone booth. In Katz, the Court rejected that argument. In Jones, Scalia concluded that the GPS-tracking was a search according to the physical-intrusion test and therefore requires a warrant.

Samuel Alito wrote a minority concurrence (along with Justices Kagan, Breyer, and Ginsburg) that argued that the Court should address the reasonable expectation of privacy in this case. He further opined that even long-term monitoring without a warrant that violated people’s reasonable expectations of privacy might be acceptable if it involved an extraordinary offense.

The physical-property-intrusion test is a good one because it tracks the original understanding of those who ratified the Amendment and sets out a bright line that the government cannot cross. In contrast, the reasonable-expectation test has severe problems. First, it is not clear how you determine reasonable expectation. Polling results are notoriously subject to how questions are framed. Nor is it clear why our Constitutional rights should depend on the latest polls from people who are neither informed about the issue nor about much else regarding police searches. Nor should the reasonable expectation of privacy depend on the intuitions of elderly Justices who have little connection to the ordinary lives of Americans, let alone poor minorities and others who are subject to frequent police searches.

Second, Jacob Sullum of Reason magazine points out, the physical-intrusion test will become increasingly irrelevant. In the future government tracking will use surveillance technologies that do not involve physical trespass. Examples of such technologies include vast camera networks, satellite tracking of GPS and cell phone signals, surveillance by drone aircraft, and so on. In the future, Justice Sotomayor points out, the federal government could track everyone’s exact whereabouts from their cell phone because it emits tell-tale signals. As Justice Kagan points out, in London, just about every place a person goes is monitored by a camera network.

Less you think this is something found in London and not here, in 2010, SUNY-Fredonia Vice President for Student Affairs David Herman stated that SUNY-Fredonia has nearly 100 cameras on campus and that the cameras cover probably 80% of the campus. He pushed (the Dunkirk Observer says “joked”) the village of Fredonia to buy and use cameras to monitor people downtown and on Temple Street. Apparently, Fredonia students and residents need to be watched very closely.

State and local governments are beginning to buy and use drones to track people’s movements from the air as part of the liberty-crushing drug war among other things. Also, as James Bamford of Wired magazine points out that the National Security Administration was sifting through domestic and foreign cell-phone calls and emails without a warrant and without physically intruding onto anyone’s property.

Third, as Dahlia Lithwick of Slate points out, the more frequently the state invades people’s things and information, the more it becomes commonplace. The more it becomes commonplace, the more it seems reasonable to the populace. The more it seems reasonable, the more it passes the reasonable-expectation-of-privacy test. Thus, this test rewards the government for aggressively pushing boundaries.

One can understand Obama Administrations frustration regarding the Jones decision. To its eternal discredit, in the past the Supreme Court has said that the government need not get a warrant to conduct random roadblocks for drunk driving or to routinely search through people’s garbage, open fields, and car cabins, despite the fact that these searches obviously violate the Fourth Amendment. The fact that the American people and courts have laid down as the government stripped away search-and-seizure rights has ominous implications for the future.

The Court arguments indicate that the loathsome Obama Administration believes that the Constitution allows the government to search the movement of every car in this country for 24 hours a day 7 days a week so long as the car is not inside a house. Obama’s Justice Departments believes such searches are morally permissible not just when pursuing terrorists, but also when pursuing drug crimes and probably other victimless activities such as prostitution and gambling. A bipartisan bill to prohibit the government collecting GPS information without a warrant was introduced in the Senate in June 2011, but the Obama administration appears to oppose it and the Senate has yet to vote on it.

If government search-freaks like the Obama administration are not smacked down, Constitution will be further shredded and big brother will eventually monitor our whereabouts, communications, and perhaps even thoughts.