Can Congress Tax Inactivity?

One of the central questions in the Obamacare ruling is whether Congress has the power to tax inactivity or tax the failure to purchase something.  This is the most obvious retort to the cigarettes analogy.  Granted, Congress has the power to tax the purchase of a cigarette, but does Congress possess the power to tax you for not purchasing a cigarette?

Roberts begins to addresses this in the opinion he authored on p. 41. There are three considerations, he says, that address this concern.

First, the Constitution does not guarantee that individuals can avoid taxes through inactivity. While many taxes are levied when you make a purchase or take an action, the Constitution contemplates a capitation or poll tax or a tax simply for existing.  Roberts thinks, then, that there is explicit Constitutional space for taxes of this sort.

Second, he says, the power to tax is not unlimited. Roberts refers to decisions “invalidating punitive exactions obviously designed to regulate behavior otherwise regarded at the time as beyond federal authority,” or invalidating taxes that are so extreme as to be purely punitive.  So the Congress could not, for instance, tax someone for not teaching their children the Gospel, because what we teach our children is beyond the proper sphere of federal authority – and the Congress could not impose a $100,000 tax for not purchasing health insurance since then the amount would be so punitive that the “tax” would no longer be a tax but a compulsion.

Third, he says, the power of taxation (thus defined) “does not give Congress the same degree of control [as one has under the Commerce Clause] over individual behavior.” Essentially, if the federal government had the power to compel the purchase of health insurance under the Commerce Clause, it could theoretically imprison a person who refuses.  If the federal government’s power is only through the tax code, then it can only tax a person who refuses to purchase health insurance.  Given that the tax cannot be clearly punitive, the tax will not be extreme, and a person can simply choose to pay the tax rather than take the action the government is seeking to encourage.

I find the second point persuasive, although I wish that Roberts had set forth the limitations more fully.  The taxing power is limited to those who pay taxes, there is an (undefined) limit on how extreme the tax can be, and it cannot reach into areas that are in principle beyond federal authority.  Are there other limitations?  Testing what is beyond federal power, and testing the limit of how heavy the tax can be, will be a matter for further litigation to explore.

I personally find the third point persuasive, although I seem to be in the minority amongst conservatives I am hearing and reading.  If you are faced with the options of purchasing an item or paying a tax, then you have to comply with those two options at risk of imprisonment.  This seems to be the case with any kind of tax, however — which is why I find Roberts persuasive on this point.

The weak point, it seems to me, is in the first point.  Is this an impermissible, direct, unenumerated tax?  That you cannot avoid taxation through inactivity is not, it seems to me, the same thing as saying the federal government can tax you for failing to purchase particular products.  If you cannot compel people to enter into commerce, why can you tax them for failing to enter into commerce?

Partisans on both sides should consider how this can play out.  While you can use tax breaks to incentivize the purchase of products you want to encourage, can you use tax penalties to penalize those who fail to purchase that product?  That is the ruling here.  So it would seem that the government can not only use incentives to encourage the purchase of fuel-efficient vehicles, but they could penalize those who fail to buy such cars.  If Congress’ taxing power extends this far, can you tax a person for getting an abortion?  Or for not getting sterilized?  The limits are not very clear.  It would seem that you could stick a tax on a broad array of human activity and thus gain far-reaching control over the behavior of the citizens.