Audio | Transcript
The sense at oral arguments in the United States Supreme Court today was that the majority of the Justices believe they can go ahead and rule on the merits of this case now. The first question heard today then, whether the suit is barred by the Anti-Injunction Act, would therefore be answered in the negative.
That was the sense anyway.
The Justices explored several reasons why that was the case. They fired their most aggressive questions at court-appointed attorney Robert A. Long, who was to argue that the AIA applies in this case and that it bars the Court from hearing the case at this moment.
Mr. Long argued first saying, “The Anti-Injunction Act imposes a pay first, litigate later rule that is central to Federal tax assessment and collection.” Central to his argument is the basic question of whether the penalty involved here is a tax or not.
He concluded that there were three reasons as to why the AIA applied:
1. Because the “penalty shall be assessed and collected in the same manner as taxes.”
2. “[P]enalties are included in taxes for assessment purposes.”
3. It “bears the key indicia of a tax.”
Chief Justice John Roberts inquired about a series of cases where the government waived this rule in the past and called it the “the biggest hurdle” to Mr. Long’s claim. Both Justices Elena Kagan and Sonia Sotomayor seemed to agree with that assessment. Those waivers imply that the AIA deals with what the Court calls a “mandatory claim processing rule” and not with the power of the court to hear the case (jurisdiction).
Justice Breyer, on the other hand, said he was probably leaning towards agreeing that the AIA is indeed a jurisdictional statute, but expressed skepticism as to whether or not this “penalty” should be viewed as a tax. The AIA itself makes a distinction between a tax and a penalty.
Mr. Long responded that the penalty “is codified in the Internal Revenue Code,” “[i]t’s part of the taxpayers’ annual income tax return,” “[t]he amount of the liability and whether you owe the liability is based in part on your income” and “[i]t’s assessed and collected by the IRS.”
Lastly, Justice Ruth Bader Ginsburg, asked about “another argument that has been made and that is all this talk about tax penalties is all beside the point because this suit is not challenging the penalty. This is a suit that is challenging the must-buy provision ” Mr. Long argued the penalty and the mandate are inseparable, as one cannot survive without the other.
U.S. Solicitor General (SG) Donald Verrilli argued for the government, basically agreeing with Justice Breyer’s assessment that this is in fact a jurisdictional statute, but that this penalty is not a tax. The SG’s argument came to a screeching halt when Justice Roberts interrupted, “General Verrilli, today you are arguing that the penalty is not a tax. Tomorrow you are going to be back, and you will be arguing that the penalty is a tax.”
He tried to differentiate the two but, as with many of the other things the government does, it just didn’t really make much sense.
Justice Samuel Alito was also a bit perplexed with some of their arguments, “Sub-section A says directly, ‘an applicable individual shall ensure that the individual has the minimum essential coverage.’ And you are saying it doesn’t really mean that, that if you’re not subject to the penalty, you’re not under the obligation to maintain the minimum essential coverage?” And the answer from SG Verrilli, “That’s correct.”
The other curious thing is that while arguing that this “penalty” is not a tax, SG Verrilli continued to refer to it as a tax in his argument. Justice Breyer had to intervene at one point, provoking the biggest laughter from the audience. Here is the noticeable exchange:
JUSTICE KAGAN: The nature of the representation you made, that the only consequence is the penalty, suppose a person does not purchase insurance, a person who is obligated to do so under the statute doesn’t do it, pays the penalty instead, and that person finds herself in a position where she is asked the question, have you ever violated any federal law, would that person have violated a federal law?
GENERAL VERRILLI: No. Our position is that person should give the answer “no.”
JUSTICE KAGAN: And that’s because –
GENERAL VERRILLI: That if they don’t pay the tax, they violated a federal law.
JUSTICE KAGAN: But as long as they pay the penalty –
GENERAL VERRILLI: If they pay the tax, then they are in compliance with the law.
JUSTICE BREYER: Why do you keep saying tax?
GENERAL VERRILLI: If they pay the tax penalty, they’re in compliance with the law.
JUSTICE BREYER: Thank you.
GENERAL VERRILLI: Thank you, Justice Breyer.
Gregory Katsas, arguing for private parties challenging the law, argued that the AIA is not jurisdictional. Justice Sotomayor was skeptical, “It does seem strange to think of a — a law that says no court can entertain a certain action and give a certain remedy as merely a claim processing rule. What the — the Court is being ousted from — from what would otherwise be its power to hear something.”
Mr. Katsas pointed to the cases the Chief Justice brought earlier, where the government has waived this requirement. He also argued that since they are not challenging the penalty, but the mandate, the challenge does not involve a tax.
The Chief Justice express his skepticism about that, arguing the two things go hand in hand, “Why would you have a requirement that is completely toothless? You know, buy insurance or else. Or else what? Or else nothing.”