Taxes levied by private corporations: A constitutional question, now that health care reform is officially dead
Topic: Political and economic
My constitutional question is this: Is it within the enumerated powers of Congress to delegate to a group of private corporations the power to lay and collect a Federal tax for their own benefit?
Now that all proposals for real health care reform are officially dead, I will raise a constitutional question that I would not have dared to raise while there was still any chance of real reform. I support real reform, and would not wish my constitutional question to prevent it from occurring.
It seems to me that all of the proposals that were on the table after the death of the public option, by requiring almost everyone to purchase health insurance from private corporations, created taxes for the benefit of those private corporations--the health insurance companies. That the payment of premiums was to have been, in effect, a tax for the benefit of the insurance companies is demonstrated by the fact that, under all proposals, nonpayment of premiums was to be subject to punishment by the federal government, starting with administrative monetary penalties (collected by the IRS!) and progressing to the threat of criminal prosecution and imprisonment. The political rhetoric often likened the tax to the requirement to maintain proof of insurance to be licensed to drive. However, that analogy breaks down because no one is actually REQUIRED to maintain auto liability insurance on threat of criminal penalty. One only need maintain auto insurance if one chooses to drive--and it is possible to live without driving (many people do it). The health insurance tax was to be made a condition of simply living. The choice not to drive is not at all analogous to the choice to commit suicide.
I will grant that such a tax for the benefit of the insurance companies by itself would clearly have been within the powers of Congress under its taxing power (Art. I, sec. 8, cl. 1) and the "necessary and proper" clause (Art. I, sec. 8, cl. 18) IF the proposal had been for the Federal government to collect a tax, in an amount set by Congress, and pay the proceeds over to the health insurance companies to provide coverage.
However, none of the proposals that died after the Senatorial election in Massachussetts did this. Instead, all of them merely required individuals to pay the insurance companies directly, in an amount to be determined by the insurance companies themselves. Moreover, the insurance companies and their premium-setting processes would remain regulated by state law, rendering the amount of this tax geographically non-uniform. But the most potent objection to this arrangement is simply that it would have given the insurance companies, private entities, the power to determine the amount of the tax without any further action on the part of Congress, that is, the power to lay and collect a tax enforced by the federal government.
According to Article I, Section 8, Clause 1 of 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; but all duties, imposts and excises shall be uniform throughout the United States...
The Constitution gives the power to lay and collect taxes to Congress--and only to Congress. The Sixteenth Amendment gave Congress the power (formerly denied it by Art. I, sec. 9, cl. 4) to impose proportional income taxes on individuals, but it did not change the fundamental principle that only Congress may lay and collect Federal taxes. Neither did it change in any way the requirement of Art. I, sec. 7, cl. 1, that all bills for raising revenue must originate in the House of Representatives and be concurred in by the Senate. So bills setting tax rates are to originate in the House, also pass the Senate, and be signed by the President or enacted by Congress over his veto. (Art. I, sec. 7, Cl. 3).
Congress has in the past on several occasions attempted to delegate some of its Constitutional powers to the Executive Branch, and been rebuked by the Supreme Court for attempting to do so. Perhaps most relevant to this discussion is the Supreme Court's opinion in Clinton v. City of New York, 524 U.S. 417 (1998), in which the Court invalidated the Line Item Veto Act--which directly involved Congress' powers to raise and spend money--as impermissibly delegating Congressional powers to the President.
If Congress may not delegate a part of its power to spend tax revenues to the President, it seems inconceivable that the courts would permit it to delegate a part of both its taxing and spending power to private corporations that are not subject to the will of the electorate at all. (Remember the great slogan of the Revolution: "Taxation without representation is tyranny!")
These constitutional objections would be competely eliminated by going to a Federal single-payer system (which I have supported). Under a single-payer system, Congress would both levy the taxes to support health care and determine how to appropriate the resulting revenues.
These constitutional objections would also probably be overcome by a system in which individuals could choose either private insurance or a public option. Such a system could be analogized to a uniform tax, from which individuals could exempt themselves by taking the appropriate actions (purchasing private insurance). Much of our present income tax law already operates in this way.
But if I were a gambler, I would wager money that the only, or nearly the only, part of health care reform that WILL survive the Massachussetts election will be the requirement that nearly everyone buy health insurance--at whatever rates the insurance companies want to demand. The companies will gladly let this part of the proposal pass, because they really WANT the subsidy!
Posted by ian_j_site2
at 9:26 PM EST
Updated: Wednesday, 20 January 2010 9:28 PM EST