Today, we filed the final paperwork asking the Supreme Court to take our lawsuit on behalf of Matt Sissel, which argues that the Individual Mandate “tax” is unconstitutional because it originated in the Senate, instead of the House of Representatives, as the Constitution commands. We filed our original petition in October, and after a month-long delay, Obama Administration lawyers filed their opposition yesterday afternoon. This morning, we filed this reply. It’s now up to the Justices to decide whether to hear the case.
The Origination Clause was adopted in order to keep the taxing power, which the Founders rightly regarded as exceptionally dangerous, in the hands of the federal government’s most democratic branch: the House, which is entirely reelected every two years, by voters in local districts. The Founders wanted to keep that power out of the hands of the Senate, which never experiences a total turnover, and whose members serve the longest terms of any elected federal officials. The Constitution accordingly declares that “all bills for raising revenue shall originate in the House of Representatives,” although the Senate has the power to “amend” revenue bills that start there.
That’s not what happened with PPACA. It began in the Senate, which struck out the entire text of a wholly unrelated, 6-page bill the House passed months earlier, and substituted the 2,000+ pages that became Obamacare, including dozens of tax increases expected to generate billions in federal revenue for Congress to spend as it chooses. The Supreme Court has held that certain types of revenue-raising bills are not subject to the Origination Clause: specifically, in the Munoz-Flores case, it held that laws that create a specific government program, and gather money to fund that program, and connect the payers with the benefits, need not begin in the House. But none of that’s true of Obamacare. The Individual Mandate generates revenues for the general treasury, and there’s no connection between payers and benefits.
In their opposition brief, Obama Administration lawyers argue that the Origination Clause doesn’t apply to the PPACA because it had broader purposes than generating government income. Relying heavily on a book by early Supreme Court Justice Joseph Story, they argue that the Origination Clause applies only to “bills [that] levy taxes in the strict sense of the words, and…not…bills for other purposes.” These words have been cited time and again in Origination Clause lawsuits, but properly understood, they actually mean the exact opposite of what the Administration claims. Story, writing in 1833, was responding to an earlier book that argued that Congress violated the Clause when the Senate originated bills creating the Post Office and regulating foreign exchange rates, because those laws generate revenue. Story answered that the Clause applies to “bills to levy taxes in the strict sense of the words, and has not been understood to extend to bills for other purposes, which may incidentally create revenue. No one supposes, that a bill to sell any of the public lands, or to sell public stock, is a bill to raise revenue, in the sense of the constitution…although [they] might incidentally bring revenue into the treasury.” In other words, any bill that imposes a tax–which is not enacted pursuant to some other constitutional power–is a bill for raising revenue subject to the Origination Clause, and the question of whether or not Congress expected to draw revenue thereby is irrelevant. A law to sell public stock or establish a Post Office or regulate exchange rates might “incidentally” raise revenue, but because it is not an exercise of Congress’s taxing power, and does not levy a tax, it is not subject to the Clause.
But the Individual Mandate tax is only an exercise of the taxing power. That’s what the Supreme Court said in the NFIB case. The Individual Mandate, the Court declared, is “only a tax”—not a penalty, or a command, or a regulation, or any other kind of law. That’s why it remains “a lawful choice” not to purchase insurance. The NFIB decision cited the earlier Drexel Furniture case to emphasize this point: where in Drexel, Congress imposed a penalty but called it a tax, in NFIB the Court found that Congress imposed a tax, but called it a penalty. The PPACA, the Justices declared, only levies a tax, because it does not do anything else. It requires “applicable individuals” to pay into the general fund, for Congress to spend as it chooses. That provision does not “incidentally” raise revenue–it only raises revenue, because it only imposes a tax “in the strict sense.” Obviously that tax is “in some measure regulatory,” as the NFIB decision acknowledged; many taxes are meant to incentivize behavior. But neither Story’s treatise, nor any legal precedent whatsoever suggests that that fact exempts a law from the Origination Clause when that law actually levies a tax, and is an exercise of Congress’s taxing power. If such a fact did immunize taxes from the origination requirement, virtually no tax would ever be subject to the Clause.
Sadly, that seems to be just the result of the D.C. Circuit’s decision. It holds that any tax whatsoever–not just the Individual Mandate, but the PPACA’s taxes on tanning salons, medical devices, employer insurance plans, etc.–would be exempt from the Origination Clause, as would any other tax if the Senate claimed that it served some larger “primary purpose,” or embedded it in an omnibus bill that addressed a wide variety of different purposes. Under the decision from the D.C. Circuit, judges are expected to discern the “primary purpose” of a bill’s “comprehensive whole,” and decide whether it was something other than raising revenue. A simple word game would allow the Senate to originate any taxes it wished: it could tax gasoline by saying the tax is meant to curb pollution, or tax cigarettes by saying its aim was to reduce smoking. As the Dissenting judges pointed out, such a holding creates a broad new exemption from the Origination Clause, which would swallow up that Clause, and seriously hinder the Constitution’s carefully designed checks-and-balances system. That’s worrisome, even if you support PPACA.
Now that our reply’s been filed, the next step is for the Justices to hold a conference regarding the petition. Four of them must agree for the Court to take the case. They have no specific deadline for accepting or rejecting a case, but the Court’s 2016 calendar is filling up fast. We hope the Court will take Matt Sissel’s case soon, and address this important question.