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Monday, August 17, 2009

Taxing Your Mere Existence

As set forth in my prior post, IRS The New Health Care Enforcer, the new tax provisions in the Senate and House draft health care bills tax people for failing to obtain acceptable health coverage. These taxes are crucial to implementing a health care mandate (which Barack Obama said during the primary he was against) whereby the power to tax compels people to obtain coverage.

This tax, though, is unlike any other tax. Normally, the federal government taxes income, the purchase and sale of goods and services, and other economic behavior. To the extent the tax laws address non-economic behavior, i.e., one's mere existence, those laws grant credits or deductions (for example, for a dependent).

I am aware of no other tax resulting from one's failure to engage in economic activity. Under these draft bills, if you exist, the government taxes you unless you engage in economic activity (and the government may tax that activity as well, as in the case of expensive employer-provided health care plans).

Even the per capita taxes which exist in some states or municipalities do not tax the failure to engage in economic behavior; each person pays the same tax regardless of what they do or do not do.

What a bizarre concept is a tax to enforce a health care mandate. If you buy a computer at a store, you expect to pay a sales tax; but do you expect to pay the tax for not buying a computer? If you earn income at a job, you expect to pay taxes on the income; but do you expect to pay taxes for not working?

This is not strictly a constitutional issue. The prevailing view seems to be that such a tax would pass constitutional muster, although there certainly are arguments to the contrary.

Rather, this is a political issue. Does the American public truly understand the impact of allowing the federal government to tax individuals based on what such individuals do not do, the equivalent of a tax on one's mere existence?

Taxing inaction destroys our right to be left alone, which is one of the foundations of liberty in this country. The implications of such a tax as a tool of political coercion truly are revolutionary.

UPDATE 8/22/09: An interesting op-ed in The Washington Post arguing that a mandate is unconstitutional.

But can Congress require every American to buy health insurance?

In short, no. The Constitution assigns only limited, enumerated powers to Congress and none, including the power to regulate interstate commerce or to impose taxes, would support a federal mandate requiring anyone who is otherwise without health insurance to buy it.

But see this response from Jonathan Adler at Volokh Conspiracy:

As much as I oppose the various health care reforms promoted by the Obama administration and current Congressional leadership (and as much as I would like to see a more restrictive commerce clause jurisprudence), I do not find this argument particularly convincing.

Related Posts:
Health Care Tax Insanity Chronicles, Part 3 (IRS To Decide Amount of Taxation)
IRS The New Health Care Enforcer

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  1. Great point, Professor. The possibilities for revenue "enhancements" become endless: a tax for not driving a hybrid; a tax for not keeping yourself healthier by eating the federally prescribed diet of veggies and whole grains; a tax for not signing onto a required year of national service; even a tax for not voting. One can easily imagine the high-minded (and superficially appealing) arguments in favor of all of these imposts.

  2. This reminds me of the stamp act which, though it was a tax on an action (not an inaction, as you mention), essentially taxed people's expression in words on paper. Even the stamp act seems more logical than this tax, however.

  3. Excellent point. I've been telling this to my liberal friends all along .... silence. They just don't care. They want this, and they want it now. For 8 years they complained about Bush tromping all over civil liberties, but failed to tell me exactly what civil liberties he infringed upon. Now that Obama really is tromping on civil liberties, they won't admit to it.

  4. I'm a lawyer, but not a constitutional lawyer. I labor under the belief that the The 16th Amendment changed the stutus quo, which was that the Federal Government could not raise any direct tax on the citizens of the states, i.e., us. The change was was that the Feds could tax our INCOME, not our very existence. Or have progressive judges amended the constitution even further? Like I say, I claim no expertise.

  5. You are taxed to engage in banking, as the US is in receivership since 1789. We are currently in our 4th cycle of bankrupcy, having given up legal title to property in 1933 to the world's creditors.

    You are not taxed on your labor. Never were, never will be. This can be verified in your tax code, and by reading selective texts that are already out there, such as Modern Money Mechanics (Fed Reserve document) Start with looking at the definition of in-come.

    Most things I read online, I expect to see a proposed solution. I see none here. Please present solutions if you have issue with the current progress of the health care reforms. Remember, it is your duty to make a private claim against this movement, if you do not wish to take part. IF done properly, you will be free and clear to pay thousands to save your ignorant life when it's needed.

    The reason they must tax is because there is new debt notes (FRNs, your 20$ bill, etc...) that will be created in deploying this 'PUBLIC' healthcare. If you don't tax, more and more money comes into play, not backed by substance, and as such to avoid hyper inflation, taxing the money already out there is a good solution to keep the value of the currency propped up.

    Do you still have your birth certificate? If you do, you are their slave, and you will eat up every little thing they want you to eat, when they want you to eat it. The US government is your effective guardian, and they will make decisions for you until you tell them legally that they cannot. Go ahead, research it yourself.... slave.

    Anonymous Creditor.

  6. With the enormous benefit of "healthcare for all," why should we waste time analyzing the constitutionality of the bill?

    It has to do with that “forcing the people” thing.

    In trying to give healthcare to all, the government has decided it must force the people who own insurance companies to cover losses that have already occurred. The uninsured with serious ailments could then pay a few hundred dollars in premium and the insurance company would have to give them a few hundred thousand dollars in return.

    As this takes away anyone’s motivation to buy insurance before a loss, and takes away anyone’s motivation to invest in an insurance company, the government’s solution is to force the people to buy the insurance.

    But if the government is providing for all of its citizens’ needs and too much of a worker’s pay is taken by that government, the motivation to work is greatly decreased. What happens then? A government cannot provide for all needs if there aren’t enough people working. So, the government will have to force people to work.

    In the Soviet Union under Stalin and Kruschev, a citizen could be arrested for coming in late to work or taking days off without first getting permission from the State.

    Once the government starts forcing people to work, some citizens may want to leave. But a government can’t provide for all needs if the productive citizens leave. So, the government will have to force people to stay. Kind of like an Iron Curtain.

    What a slippery slope we have created, once we allow the U.S. Constitution to be ignored for the “greater good.” Keep in mind that the worst atrocities known to man have occurred when governments overstepped their bounds. The U.S. Constitution is America’s protection.

    Proponents of forced insurance premiums might say that European countries have socialized healthcare and are doing fine. (Greece?!) But those countries depend on a healthy global economy based on free enterprise. When government interferes too much with free enterprise, what will happen?

    Proponents of forced insurance premiums might say that governments have always forced citizens to pay taxes. But these mandatory premiums are not being called “taxes.” Know why? Because excessive taxation that prevents workers from accumulating the fruits of their labor will cause citizens to revolt. They start saying things like, “Give me liberty or give me death.”

    That’s the problem with forcing people.