Skip to main content

What the Supreme Court ruled on health care 'tax'

By Josh Levs, CNN
updated 1:37 PM EDT, Thu July 5, 2012
Supporters of the health care legislation celebrate after the Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act in a 5-4 ruling Thursday, June 28. Supporters of the health care legislation celebrate after the Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act in a 5-4 ruling Thursday, June 28.
HIDE CAPTION
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
Health care and the high court
<<
<
1
2
3
4
5
6
7
8
9
10
11
12
>
>>
STORY HIGHLIGHTS
  • The Supreme Court rejected arguments that the individual mandate involves a "penalty"
  • The mandate "looks like a tax in many respects," Chief Justice John Roberts wrote
  • The Obama administration argued that it's a penalty but also could be viewed as a tax
  • The court said the Anti-Injunction Act does not apply

(CNN) -- In its ruling last week on the national health care law, the Supreme Court found that penalties the law places on people who don't buy health insurance count as a tax protected by the Constitution.

The Obama administration had argued that the fees should be considered a penalty. But the government also argued that the individual mandate can be viewed as constitutional under Congress' powers of taxation.

The high court rejected the "penalty" argument.

"The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the (Internal Revenue Service) through the normal means of taxation," Chief Justice John Roberts wrote in the decision.

The court noted that the law calls for no other punishments for refusal to buy health insurance.

Romney, Obama's tax vs. penalty problem
Is health care mandate a tax... or not?
Obama said mandate isn't tax in 2009

"Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance," the decision said, citing figures from the Congressional Budget Office. "We would expect Congress to be troubled by that prospect if such conduct were unlawful."

What the ruling means to you

But on the taxation argument, the court agreed. The Constitution allows Congress to tax and spend, giving the federal government "considerable influence even in areas where it cannot directly regulate," the decision said.

The mandate "looks like a tax in many respects," Roberts wrote. The money is to be paid by people when they file their tax returns and does not apply to those who pay no federal income taxes; the amount someone owes "is determined by such familiar factors as taxable income, number of dependents, and joint filing status," and the "requirement to pay is found in the Internal Revenue Code and enforced by the IRS."

The high court overturned a unanimous decision by the 11th U.S. Circuit Court of Appeals that the mandate did not impose a tax.

The Supreme Court also ruled that it could proceed with considering the constitutionality of the tax despite the Anti-Injunction Act, which dates back 145 years. The law said lawsuits can't be used to prevent taxing, only to get refunded for taxes already paid. The high court said whether something is a tax for the purposes of the Anti-Injunction Act is Congress' decision -- and since Congress designated the mandate as including a penalty rather than a tax, the law did not apply in this case.

"It is up to Congress whether to apply the Anti-Injunction Act to any particular statute, so it makes sense to be guided by Congress's choice of label on that question. That choice does not, however, control whether an exaction is within Congress's constitutional power to tax."

The court emphasized that it was not weighing in on whether the mandate is a good idea.

"Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness," the decision said.

How are you affected by the ruling? Share with us on CNN iReport.

ADVERTISEMENT
Part of complete coverage on
The Affordable Care Act
updated 1:37 PM EDT, Thu July 5, 2012
In its ruling last week on the national health care law, the Supreme Court found that penalties the law places on people who don't buy health insurance count as a tax protected by the Constitution.
updated 4:03 PM EDT, Thu June 28, 2012
The Supreme Court's decision Thursday to uphold the Affordable Care Act means that the predictions about how it will affect Americans remain in place.
updated 10:54 AM EDT, Fri June 29, 2012
With his opinion for a narrow majority of the Supreme Court, Chief Justice John G. Roberts Jr. has, for the first time since his confirmation as chief justice in 2005, breached the gap between the conservative and liberal wings of the court on a polarizing political issue.
updated 9:23 PM EDT, Thu June 28, 2012
In a landmark ruling that will impact the November election and the lives of every American, the U.S. Supreme Court on Thursday upheld the controversial health care law championed by President Barack Obama.
Here's a breakdown of the votes an what the Supreme Court justices wrote about the health care ruling.
updated 3:51 PM EDT, Thu June 28, 2012
The court's opinion, in preserving the Patient Protection and Affordable Care Act, under Congress' taxing power, still gives a virtually unlimited sway to the power of the federal government, Stephen Presser writes.
updated 1:41 PM EDT, Thu June 28, 2012
Chief Justice Roberts, in a move that likely surprised many, joined the four more liberal justices in declaring that the mandate could survive, but as a tax.
updated 11:19 AM EDT, Thu June 28, 2012
What exactly did the Supreme Court decide? Here's the nuts and bolts of their ruling.
updated 11:30 AM EDT, Thu June 28, 2012
At stake in the court's ruling is the well-being of millions of Americans living with chronic diseases such as cancer.
updated 11:25 AM EDT, Thu June 28, 2012
The Supreme Court is expected to hand down its ruling on the health care reform Thursday. What the justices decide will have an immediate and long-term impact on all Americans.
updated 5:02 PM EDT, Thu June 28, 2012
The Supreme Court is set to rule on the constitutionality of the Patient Protection and Affordable Care Act on Thursday. The landmark decision will dictate the way health care is administered to millions of Americans.
updated 11:16 AM EDT, Sun June 17, 2012
A look at key moments in the law's history from the start.
updated 11:19 AM EDT, Thu June 28, 2012
A look at the four issues the high court tackled separately during oral arguments in late March. Those issues are expected to play key roles in the judges' final decisions.
ADVERTISEMENT