John Roberts Called the Mandate a Tax, and Conservatives Still Argue About Why

On the last day of the 2012 term, with the whole country listening, the Chief Justice of the United States found a way to say that a penalty was a tax without anyone in the room having called it one. It was the greatest feat of judicial translation since someone rendered "no" as "perhaps."

Conservatives have been arguing about it ever since. Some call it the finest act of judicial restraint of the age. Others call it the moment the Court rewrote a statute to save it. Both camps are made of serious people, and both owe the other a fair hearing. Let us give each one, and then say which is right.

The statute

The Patient Protection and Affordable Care Act of 2010 contained, among its many provisions, a requirement that most Americans maintain a minimum level of health insurance. Those who did not would owe a "shared responsibility payment" to the Internal Revenue Service, calculated and collected with the tax return. The provision is usually called the individual mandate. A second provision expanded Medicaid, and threatened States that refused with the loss of all their existing Medicaid funding.

The Act's defenders defended the mandate under the Commerce Clause, the Necessary and Proper Clause and, in the alternative, the taxing power. A group of States, twenty-six according to Justice Ginsburg's opinion, and a number of private plaintiffs, including the National Federation of Independent Business, sued, arguing that Congress had no power to order citizens to buy a product.

Three questions

The case, NFIB v. Sebelius, decided on June 28, 2012, turned on three questions.

1. Can Congress require citizens to buy insurance under the Commerce Clause? No.
2. Can it do so under the taxing power, by treating the payment as a tax? Yes, by a vote of 5 to 4.
3. May Congress threaten States with the loss of all their existing Medicaid money to force an expansion? No, by a vote of 7 to 2, as coercion that exceeded the spending power.

Chief Justice Roberts wrote the controlling opinion, and he did something that has never stopped being surprising. He sided with the challengers on the first question, with the government on the second, and with the States on the third.

The Commerce Clause holding

Roberts held that the Commerce Clause does not authorize the mandate. The clause lets Congress "regulate Commerce... among the several States." It assumes there is commerce to regulate. The mandate, he said, does not regulate existing activity. It compels individuals to become active in commerce by purchasing a product, so that Congress can then regulate them for not doing so. The Constitution gives Congress power to regulate commerce, not to compel it.

That was a major victory for limited government. The government's argument had a chain with no stopping point. If the power to regulate commerce includes the power to compel the purchase of insurance because everyone will eventually need health care, then it includes the power to compel the purchase of anything else everyone will eventually need. Roberts saw that the government's theory had no principled limit, and he declined to adopt it. Roberts also concluded that the mandate could not be sustained under the Necessary and Proper Clause, since it was not a proper exercise of that power.

The four Justices who would have struck down the entire Act, Scalia, Kennedy, Thomas and Alito, agreed on this holding. Four Justices, Ginsburg, Breyer, Sotomayor and Kagan, disagreed, and would have upheld the mandate under the Commerce Clause. The result was a majority of five for the proposition that there is a limit to the commerce power, which is more than the conservative side had had since Lopez, discussed in United States v. Lopez Was the First Commerce Clause Limit Since the New Deal.

The taxing-power holding

Then the Chief Justice turned to the question that decided the case. Congress has the power "to lay and collect Taxes, Duties, Imposts and Excises." Article I, Section 8, Clause 1. The government had argued that the payment was a tax. The challengers argued it was a penalty, and the Act itself called it a penalty.

Roberts started from a canon of construction. "Every reasonable construction must be resorted to, in order to save a statute from unconstitutionality." The canon, which goes back at least to the nineteenth century, says that when a statute can fairly be read two ways, one of which would make it unconstitutional, the court should adopt the reading that saves it. The question, therefore, was whether the payment could "reasonably be characterized" as a tax.

He answered yes. The payment is paid to the IRS with the tax return. It is calculated by income, filing status and number of dependents. It raises revenue. For most people the amount would be less than the cost of insurance, so that it was not a punishment so much as a price. And it was not tied to unlawful conduct: nothing in the Act made it illegal to go without insurance. It simply imposed a financial consequence, as the tax code does when it taxes some choices and not others.

He wrote, in a line that has since been quoted by both sides, that the Court does not decide whether the law is wise, and that "It is not our job to protect the people from the consequences of their political choices."

Four Justices of the liberal wing joined him on this point, and so the mandate stood. In a separate holding, Roberts decided that the Anti-Injunction Act, which bars suits to stop tax collection, did not stand in the way, because Congress had called the payment a penalty rather than a tax for that purpose. Critics saw a trick: it was a penalty for one purpose and a tax for another. Defenders said the Constitution cares about substance, and the Act's labels are not binding in either direction.

The joint dissent

Justices Scalia, Kennedy, Thomas and Alito wrote a joint dissent, unsigned, in the voice of a single hand. They would have struck down the whole Act. They agreed that the mandate exceeded the commerce power, and they said it could not be saved as a tax.

Their argument ran in numbered steps.

1. The Act uses the word "penalty," and uses it repeatedly, and does not use the word "tax" for this payment.
2. Congress knew how to impose a tax, and did so elsewhere in the same Act. Choosing "penalty" was a deliberate decision, and an accountable one: it allowed Congress to say that no new taxes were being imposed.
3. A court that reads "penalty" to mean "tax" is not construing a statute. It is rewriting it.
4. The canon of constitutional avoidance allows a court to choose among fair readings. It does not allow a court to adopt a reading the text will not bear.
5. And so the Court has changed the statute, and in doing so has relieved Congress of the political cost of its own decision.

They added that the Court's disposition had effects on the structure of the Constitution, since it let a Congress that denied imposing a tax collect one anyway.

The conservative argument for Roberts

Defenders of the Chief Justice, and they include a number of respected jurists, say the following.

1. A court should uphold a statute if it fairly can. The presumption of constitutionality is not a liberal habit but a conservative one. It rests on respect for the elected branches, and on the Federalist's view that courts should strike down laws only when the violation is clear.
2. The Chief Justice did not rewrite the Act. The tax reading is fair. The payment is collected by the IRS, reported on the tax return and calculated by income. The label does not control, and the Court has long looked to the substance of an exaction.
3. The decision cost the government a great deal. In the same opinion, the Court limited the commerce power, limited the Necessary and Proper Clause, and set a limit on the spending power. A conservative who thinks about limits on federal power should count that as a victory.
4. It left the question to the voters. If the mandate is a tax, then Congress imposed a tax, and the voters may hold it accountable. That is exactly the accountability the Constitution is designed to provide.

That is a serious argument. It deserves to be taken seriously by people who call the decision a betrayal.

The conservative argument against

Critics reply with four points.

1. The statute said "penalty." Congress chose its word. When a court reads a different word into the text to rescue it, the court is making the policy. The canon of avoidance is a tool for resolving ambiguity, and there was little ambiguity about a provision that Congress called a penalty, in so many words, and that its own supporters said was not a tax.
2. It lets the legislature evade accountability. The Act's supporters told the public the mandate was not a tax. The Court told the public it was a tax. Both of those claims are made by branches of government that should not need to say different things in order to win.
3. A saving construction is for statutes, not for political bargains. The proper remedy for a statute that exceeds Congress's powers is to say so, and let Congress try again under its real powers, honestly and openly.
4. The tax holding was an invitation. If Congress may impose a tax on a person for not buying something, the limit on commerce is of less comfort than it first appears. The Chief Justice shut one door and opened another.

A conservative reader will recognize the force of the worry: a power to tax what you do not buy is a power to regulate by price.

The verdict

Where do I come down? I think both sides have the better of one point and the worse of another.

The defenders are right that the Chief Justice's commerce holding was a major gain for enumerated powers. For the first time in years, five Justices said in an opinion that the clause has an outer boundary and that Congress cannot compel citizens to buy a product. That principle is now in the books, and challengers have cited it since.

The critics are right that the tax holding strained the text. A statute that called the payment a penalty, defended it as a regulation and then, in the face of a constitutional defect, became a tax, is a statute that was saved by a court's willingness to read it differently than the Congress that wrote it. I am not persuaded that the canon of avoidance reaches so far. And the accountability point is the one that will outlast the case: the voters were told one thing and the law was held to be another.

So my view, stated plainly, is that Roberts was right about the Commerce Clause, wrong to stretch the canon on the tax, and, whatever his motives, a Chief Justice who preferred to leave the fight to the voters. The remedy for a law like the Affordable Care Act, in the end, is to repeal it. Judges cannot do that for us. They can only say what the Constitution permits, and it is for the people to decide what they want.

Some history shows how this played out. Congress later reduced the amount of the shared responsibility payment to zero, effective in 2019, in the Tax Cuts and Jobs Act of 2017. When a later challenge, California v. Texas (2021), reached the Court, it held that the plaintiffs lacked standing and did not rule on the mandate's validity. And in King v. Burwell (2015), Roberts wrote again, for a 6-to-3 majority, to read a different part of the Act in a way that kept its subsidies. Justice Scalia dissented, and he made a textual argument of the kind in this post. Those later cases show the same Chief Justice choosing the same reading of his job: avoid the largest disruption the text will bear.

What it means for a family

The practical lesson is about where the fight happens. If the courts will not strike down a law you dislike, you have to repeal it. If the courts will save a law by reading it generously, the legislators who wrote it will say they never meant it. Either way the work of a republic is political: persuade your neighbours, elect representatives who will say plainly what a law does, and hold them to it.

For related reading, see Roberts Said Judges Call Balls and Strikes. Conservatives Still Argue Over It on Roberts's view of the judge's role, The Major Questions Doctrine Explained, From Tobacco to the Power Plants on limits to executive reach, and Judicial Review Is in the Constitution's Logic, and Judicial Supremacy Is Not. The statute-saving canon is part of the story in Seven Myths About the Roberts Court, Tested Against Its Own Opinions, and the Commerce Clause history is in United States v. Lopez Was the First Commerce Clause Limit Since the New Deal. For the Founders' view of the Court, see Federalist 78 Called Courts the Least Dangerous Branch. Was Hamilton Right?. The taxing power is in Article I on the Constitution page.

The case in brief

1. NFIB v. Sebelius (June 28, 2012) held that the Commerce Clause does not let Congress compel citizens to buy insurance.
2. A 5-to-4 majority upheld the mandate as an exercise of the taxing power, relying on the canon that a statute should be saved by any reasonable reading.
3. The joint dissent of Scalia, Kennedy, Thomas and Alito argued that "penalty" cannot be read as "tax," and that the Court rewrote the law.
4. Conservatives are split between restraint and rewriting, and both sides have something right: the commerce limit is a lasting gain, and the tax reading strained the text.
5. The lasting remedy for a law is repeal, and that is the voters' job, not the judges'.

What you can do: read Article I, Section 8, Clauses 1 and 3 on the Constitution page, then ask one of your members of Congress which clause they rely on for the next mandate they propose.