Tax: A contribution for the support of a government required of persons, groups, or businesses within the domain of that government.
Penalty: A punitive measure, regulatory in nature, established by law or authority, to deter certain conduct.
A Supreme Court decision upholding the constitutionality of the healthcare mandate based on the government’s taxing authority?
Well, why not? The tax code has been dragooned into service to influence and shape social behavior for over a hundred years, from a dollar-a-pack cigarette tax, to mortgage relief to encourage home ownership. In addition to the collection of revenue to bankroll government it evolved into an instrument for social engineering and stealth workarounds to advance social policy. Which of the following statements is true?
A tax raises revenue, a penalty raises revenue, therefore a penalty is a tax?
A tax influences behavior, a penalty influences behavior, therefore a tax is a penalty?
That’s right — neither is true. These syllogisms illustrate a well-known logical fallacy that can be found in any college textbook on logic. How, then, could a superior jurist like John Roberts persuade himself that a penalty is a tax? Well, the Chief Justice opined that the penalty for noncompliance with the mandate ($695) was too weak to constitute a deterrent, and must therefore be a tax! This left many to wonder if he had intentionally confounded these two concepts, and thus rewritten the mandate so the Affordable Care Act would pass constitutional muster.
The logic was so bizarre and flawed that some, like Charles Krauthammer, suggested that Roberts resorted to this semantic legerdemain to avoid politicizing the Court and weakening its prestige. But this is to forget that the Constitution was born in crisis and the Court has weathered more violent partisan storms than those of the current climate: just read some of the broadsides in newspapers written one hundred to two hundred years ago. To my knowledge, no Congressmen have been caned to within an inch of their lives in the well of the Senate (though, no doubt, some have deserved it), and no cabinet secretaries killed in duels in the past 100 years. A good rule of thumb: follow the law and let the chips fall where they may.
Misconstruing what is obviously a penalty as a tax may seem a harmless bit of hocus pocus, but playing hard and fast with meaning and general disregard for semantic precision has resulted in a Supreme Court decision that could have unfortunate consequences for the American economy. Or as one editorialist (James Delong) put it:
The ACA is a complex and incoherent law drafted in haste and secrecy, written largely by the healthcare industry to promote its own profits by bringing more people into a government-administered system open to capture and looting. It is defended by an administration trapped by the imperative of defending its handiwork. The product is a Rube Goldberg regulatory system that cannot be made rational, workable, or intelligible, and is a delicious (to Republicans) promise of an endless stream of outrages.
It is all very well for the Chief Justice to defer the issue of constitutionality back to elected officials, but as Ronald Reagan once remarked, “The nearest thing to eternal life we will ever see on this earth is a government program,” and it will be difficult to impossible to repeal the healthcare law even if Mitt Romney is elected president, unless there are significant Republican majorities in both houses of Congress. The stakes were high, very high. This could be the worst Supreme Court decision since Kelo v. City of New London, and it is fair to ask if, during his stormy sessions with the brethren, Justice Roberts experienced some sort of mental lapse.
In the last century or so, no Congressmen have been caned to within an inch of their lives in the well of the Senate — though, no doubt, some have deserved it.
The original sin was, of course, using the tax system as a quick-and-dirty tool to improvise policy, to encourage (say) petroleum exploration or to discourage the use of tobacco, thereby exempting government from the strenuous work of writing carefully crafted long-term programs to advance a coherent policy. The Constitution says that
The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States . . .
The framers did not say that the collection of taxes could or should be used to influence economic behavior or placate special interests, and in this they showed some foresight: broadening the concept of taxation to, for example, provide incentives for certain economic entities, has resulted in a Byzantine tax code so complicated and unwieldy, so corrupted by influence-peddlers and lobbyists, it has become a national embarrassment, and a general disincentive to business and entrepreneurship. Using the sacrosanct tax code as an ad hoc tool to implement policy (rather than enact problem-specific programs) has produced some very bad tax law.
Another institutional casualty, perhaps more fatal than the debasement of the tax system, has been the English language. A general contempt for the elegance and precision of English, e.g. twisting of meaning out of all recognition, demonstrates the dangers that George Orwell warned us about over 60 years ago in his essay, Politics and the English Language. The decline of English, he observed, had entered a deadly spiral:
it becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.
It was Orwell’s belief that words and semantic distinctions matter, that mangling language to suit one's purposes eventually leads to a world where black is white and up is down. How prophetic! We need language to map the world as it is, not as we would like it to be, and a breach of semantics can be even more lethal than a breach of law. Using imprecise language to conceal real meaning is a sure path to chaos. Orwell was talking about communist pamphleteers and flannel-mouthed journalists at the time, but it applies equally to any abuse of language, and that includes the recent decision by Chief Justice Roberts to call a penalty a tax.