The federal government has three ways it can obtain a law-abiding American’s property:
1. It can tax you. Taxation is the power of the government to force transfers of cash from owners to itself. It is a broad power, expressly stated in the Constitution:
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 . . . .
Sometimes the government takes your cash on the basis of your income. Sometimes the government takes your cash because you bought something, like cigarettes or gasoline. Sometimes the government takes your cash when you trade with other nations. And sometimes the government takes your cash because you die. But if the government taxes you, it is always the direct recipient of the money – at least for a moment, before it spends it.
2. It can take your property (and pay you for it). Eminent domain is the power of government to force transfers of property from owners to itself or its designees. A little-known fact — the power of eminent domain is not in the Constitution itself. Rather, it was presumed by the Framers to be an inherent power of government, but one that needed to be controlled. Thus, the Fifth Amendment prohibition on uncompensated takings:
No person shall…be deprived of life, liberty, or property, without due process of law, nor shall private property be taken for public use, without just compensation.
Here, the Framers were striking back at the abuses of the British government, which occasionally took private property for use by the Crown, without compensation. And when the Fifth Amendment says “property,” it means the tangible stuff — your real estate, your tractor, your great aunt’s buffet, you name it — just not your money. That only makes sense, because when it comes to the “just compensation,” unless the property owner agrees otherwise, it’s always going to come in the form of cash.
One small change in practice since the days of the Founders has been the designation of some limited private parties with the right of eminent domain. In these cases, the government usually grants heavily-regulated companies (railroads, power companies, telecoms) with a limited right to exercise eminent domain in furtherance of a public utility. But even in these cases, the private party must demonstrate that the taking is necessary for a public purpose; it can only take tangible property (not cash); and the taking must be justly compensated with cash.
3. It can regulate your commerce (and take your cash in the process). Since the advent of the 20th century, Congress has done remarkable things through its Article I power to “regulate Commerce . . . among the several States. . . .” It has regulated the financial markets, ensured the safety of foods and drugs, prohibited pollution, protected endangered species, and imposed workplace rules. In each case, it requires a person or corporation performing a certain activity to perform it in a certain manner. For example, if a mining company chooses to employ workers in mining, it has to properly train them and give them certain equipment necessary to do their jobs safely. The government does not require anyone to actually mine — that is up to the company — but if it chooses to mine, it has to do it right. Similarly, if a steel mill wants to operate, it has to get an air pollution permit. That permit might require the company operating the mill to pay certain fees to the government, but only because it wants to operate. If instead it shuts down the mill and didn’t doesn’t emit pollution, it doesn’t have to pay the fee.
Does this sound elementary? Maybe so. But if President Obama’s health care plan is enacted as described, it will attempt to create a fourth way for the federal government to take your property. Let me explain why.
Our good friends at American Missive took aim at our President’s latest easy target: his claim that his “excise tax” on those who refuse to buy health care under his plan is not a tax. Let’s look at his explanation:
Frankly, I agree with the President. This is not a tax. A tax requires a property owner to pay cash to the government to pay for public services or debt. In this case, the only time the government gets cash is when it fines the individual for failing to obtain health insurance. That’s not a tax — fines are an act of law enforcement. Even if one gets fined here, he still has to pay a private party for health care. So, President Obama, you’re right — this is not a tax.
So, one has to ask — which of the other two options is it? Let’s take the easy one first — it’s definitely not an exercise of eminent domain. Why is that an easy answer? Because the transaction doesn’t involve tangible property. Rather, Obama’s health care plan would require a private citizen to pay cash to a third party for a service (health insurance). Now, the health insurance mandate does bear one similarity to the eminent domain option. Only the eminent domain option allows government to invest a non-governmental entity with the ability to act in the public interest — the government can’t give private parties the right to tax or regulate. But remember why the eminent domain option exists — to allow the government (or its designee) to obtain specific tangible property that it needs for public purposes. That need isn’t in play here, so eminent domain is off the table.
So we’re left with Congress’ power to regulate interstate commerce. To be sure, this power has been a carte blanche for Congress for almost 100 years now, so one might be tempted to end the analysis right here. But even a broad-minded advocate of the Commerce Clause has to acknowledge that the health insurance mandate is entirely new territory. Why? Because it regulates a citizen’s existence, not her activity.
If you want to understand the outer limits of the Commerce Clause, it’s best to head to the wilderness. Consider, for example, whether the proposed regulation would apply to a person who effectively opted out of all commercial activity, pitched his tent in the woods, caught or grew his own food, and did everything in his power to avoid the rest of humanity. Obviously, such a person is not engaging in interstate commerce — he’s not engaging in commerce at all, in fact. The closest he comes is when he kills his food (he might be shooting a spotted owl, after all), but that’s a debate for another day. Regardless, our man in the wilderness is NOT consuming health care and driving up the costs for the rest of us. But under the Obama plan, he would still be subject to a fine for failing to obtain health coverage. Our man in the wilderness isn’t undertaking any activity, or availing himself of a privilege — he is surviving, plain and simple. When Congress has attempted to criminalize activity that is inherently intrastate (as this man’s would be), the Supreme Court has struck down those regulations (U.S. v. Morrison; U.S. v. Lopez).
Consider three scenarios where Obama’s fine would apply. We’ve already considered the first — the person who never seeks health care or insurance. It’s impossible to conceive of how that individual might impact interstate commerce, but it’s also difficult to conceive of such an individual in today’s society. So we move to the second example — the person who always pays cash for health care. This was the model for health care payment as recently as fifty years ago. Is it possible that such behavior — which creates no public debts, nor imposes higher costs on the insured — has such an irresistible impact on the health insurance industry that it can be subject to civil enforcement? The third scenario goes to the individual who has health insurance, but not a plan that meets all the bells and whistles required by an Obama regime. If a conservative Christian refuses to carry health insurance that covers abortion or contraceptive services for religious reasons, does her conscience-based alternative create consequences for interstate commerce? She pays her premiums; she covers her co-pays; and yet her business transaction is one worthy of national regulation?
But this all ignores the more fundamental question: Can the federal government require a citizen to pay cash to a private party for services he does not wish to receive, and if he refuses, penalize him? Such an act would be unprecedented for the federal government. It is so unprecedented that, to my knowledge, it has never been tested in the federal courts. I would argue it’s never been tested because no prior Administration would ever argue it was possible. It’s not taxation — the government isn’t getting the money. It’s not eminent domain, because no tangible property is being exchanged. And it’s not regulation of commerce, for the burdened citizen is not seeking to engage in the commercial transaction being regulated. So what is it?
I’ll tell you what it is — it’s unconstitutional.
Marque – great post. I agree with your analysis. I will say, though, I haven’t been following this part of the debate as closely as the others on the Missive. One question I’ve had is how would you address the argument of: the state governments require us all to have car insurance? What if health insurance mandates were on a state level- would they be more palatable to you? Curious your thoughts.
Stephen — C. Edmund Wright did such a better job on this than I ever could, so I yield the floor to him: http://www.americanthinker.com/2009/09/obamas_elusive_auto_insurance.html
Car insurance is a freedom. Nobody forces you to drive. In fact you can have a vehicle labeled “Farm Use Only”. You can car pool, you can use the car on private property, etc.
You take out car insurance in order to utilize state property. Health insurance is completely different. Your health isn’t the property of the federal government. Until now…
Thanks for your analysis. However, I have a question. How do you define “tax”. Is the following your definition.
I see the property owner as paying cash for health care services for not having health insurance to the federal government as it will then have to cover the cost of this persons health. The same as I pay a tax for having an income over what I give in charity, dependent care, and other tax write-offs.
Thanks, Thinker. If the payment to the government was as you describe it — essentially a compensation for costs incurred by the government for picking up your health expenses — I would agree that this would be a tax or fee. But that’s not how the charge envisioned by the Obama plan works.
The Obama plan creates a legal obligation for you to buy health insurance. If you don’t buy health insurance, the government can fine you. That fine isn’t intended to recover the government’s costs — it’s just like any other civil penalty for failing to follow the law. In fact, the government has no explicit obligation to pick up your unpaid medical costs at all. And if you get caught because you went to the hospital and ran up your medical expenses before they realized you were uninsured, the hospital must still recover from you — not the government — for those expenses.
Think about it this way, using the ever-popular auto insurance analogy. If you drive without auto insurance, and you cause an accident, you may get fined by the government. That fine goes into the public fisk, but it never compensates the person you hit, or the victim’s insurance company that must now cover the costs on its own. Plus, you’re still required to get auto insurance — the fine doesn’t substitute for your insurance, and it won’t help you pay for your own costs.
No, this fine is punitive, not compensatory. Thus, just like a $50,000 fine issued to someone who pollutes or embezzles is not a tax, the fee you pay the government for failing to have health insurance wouldn’t be a tax. It’s also useful to think about how the government would enforce the obligation. If you don’t pay your taxes (not that you evade them, but that you simply can’t pay them), the government will file liens against your property, garnish your wages, or otherwise seek to recover. It won’t throw you in jail. If you don’t pay a fine, though, the government can and will throw you in jail, often as a substitution for the debt. You can never substitute or satisfy a tax obligation by spending time in jail.
Thanks for the response. Good stuff I hadn’t thought of it in this way.
If in the word of Obama himself it’s “not a tax”. And the government doesn’t have a right under any other authority to claim this money then and the Supreme Court has up held this i.e. U.S. v. Morrison and U.S. v. Lopez. Will American’s actually pay this money?
It seems as though this “fine” for living wouldn’t uphold in court.
Terrific perspective. Thanks for enlightening!
Thinker, I certainly hope you’re right. But it’s not so much the payment of money that is the problem — it’s the legal requirement (backed up by the threat of the fine) for you to pay another for services as a condition of your existence.
I may have gone a step too far when I said this was unprecedented. There was a time when Americans were required, upon penalty of legal punishment, to spend their private resources for the benefit of other private parties. Even then, the recipients provided the payors with basic services that were required for living. But no one really thought it was a very good deal for the payors.
That system, called slavery, was outlawed by the Thirteenth Amendment. In that system, Americans paid for food, water, and shelter with their time, sweat, and blood. If those American stopped paying, the government stepped in to punish them and enforce the dubious contractual relationship.
If I am required to spend many dozen of my days every year earning money to pay my health insurance masters, and the only reason I have to purchase that health insurance is because the government is forcing me to do so, how is this little arrangement any different?
Marque,
This is a fantastic exploration of the constitutionality of the healthcare proposal. I wish the timing had been different so I could have referenced some of your points in my post. You are spot on. Given your thesis, I would happily go back and rename my post:
“Obama Extorts Americans For Being Born”
Constitutionally speaking, it clearly is not a tax.
Thanks for your outstanding work on this piece.
Chuck
I don’t know If I said it already but …Excellent site, keep up the good work. I read a lot of blogs on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say I’m glad I found your blog. Thanks, 🙂
A definite great read..Jim Bean
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