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Willis & Chung on the Unconstitutionality of the Health Care Mandate as a Tax

By Lawrence Solum

Steven J. Willis and Nakku Chung (University of Florida - Fredric G. Levin College of Law and University of Florida - Fredric G. Levin College of Law) have posted Of Constitutional De-Capitation and Health Care (Tax Notes, Vol. 127, No. 9, May 31, 2010) on SSRN. Here is the abstract:

Willis and Chung demonstrate how I.R.C. § 5000A - the HEALTH CARE ACT penalty - is an un-apportioned Capitation Tax, violative of U.S. Constitution Article I, Section 9. As they clearly demonstrate, the "penalty" is a tax. To be a constitutional federal tax, it must be an Excise Tax, an Income Tax, or a proportional Capitation Tax. Through the process of elimination, they demonstrate the penalty is none of these.

Despite being labeled an Excise Tax by Congress, the penalty is unlike any existing Excise Tax because it applies to the failure to act by an individual. Existing failure-to-act Excise Taxes differ because they apply to entities which have chosen to partake in particular activities. The provision thus fails the historic requirements of an Excise Tax, namely that it apply to an activity, transaction, or the use of property. The tax also fails the traditional "pass-on" nature of Excise Taxes. If the Court were to approve it as a uniform Excise Tax, the Direct Tax apportionment requirement would be eviscerated.

The penalty similarly fails the 16th Amendment definition of an Income Tax. Not only does it appear not to tax income, it fails to operate as an Income Tax, and it fails the 16th Amendment realization requirement long accepted by the Supreme Court. Willis and Chung dismiss - as unrealistic academic dogma - arguments for ignoring the realization requirement. They acknowledge, but refute, academic arguments criticizing the Pollock and Macomber decisions, as well as arguments for ignoring the Constitution's Direct Tax apportionment requirement.

Full post as published by Legal Theory Blog on April 23, 2010 (boomark / email).