The U.S. Supreme Court decision upholding the 2010 health-care law’s individual insurance mandate as a tax opens a “brave new world” for Congress to impose levies, said Representative Dave Camp, chairman of the House Ways and Means Committee.
Congress must consider the implications of allowing a tax on “inactivity,” such as the penalty for not having health insurance, Camp, a Michigan Republican, said at a hearing today in Washington.
“Under that premise, what is there to stop future Congresses from using this taxing authority to compel a similar ‘it’s for the good of the country’ outcome?” he said. “If one refuses to purchase the goods and services the government thinks are best for the country, the act of not purchasing can now trigger a tax.”
The court’s 5-4 ruling on June 28 upheld the requirement that most individuals obtain health insurance, passed by Congress as part of the health-care overhaul. It will apply starting in 2014.
Representative Sander Levin, the top Democrat on the Ways and Means panel, linked the individual mandate to a similar provision in the Massachusetts health-care law implemented when Mitt Romney, the Republican presidential candidate, was governor of the state.
“Obamacare is Romneycare,” said Levin of Michigan.
Levin noted that about only 1.4 percent of the population will face the tax, which will be levied at a maximum of 2.5 percent of income.
Congress limited the Internal Revenue Service’s ability to collect the tax associated with the insurance mandate, barring the agency from using liens and criminal enforcement tools. Instead, the IRS’s main avenue for collection will be reducing taxpayers’ refunds.
Witnesses before the panel disagreed on the implications of the court’s ruling and what it empowers Congress to do.
“The Supreme Court has fashioned a breathtaking new power for Congress,” said Lee Casey, a partner at Baker & Hostetler LLP in Washington.
Under this precedent, Congress may impose taxes on people who don’t use motorcycle helmets, own guns or refuse to buy solar panels, said Carrie Severino, chief counsel and policy director of the Judicial Crisis Network, an advocacy group that supports limited government.
Walter Dellinger, a former U.S. solicitor general, said he thought the court’s decision was an “unremarkable” expression of Congress’ broad taxing power. Any other decision, he said, would have serious implications for self-government through elected representatives.
“It operates no differently than the tax incentives in the law” for education and home mortgages, he said.
The Ways and Means Committee has jurisdiction over tax legislation, which must originate in the U.S. House.
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