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Can the IRS Rewrite Obamacare?

The latest challenge to the Affordable Care Act might let them by EVAN BERNICK.

Does the law mean what it says, or whatever government officials want it to mean? That is the fundamental question confronting the Supreme Court in King v. Burwell, the latest challenge to the Affordable Care Act. While the answer would be uncontroversial in an ordinary case, nothing involving Obamacare is uncontroversial. It will take a Court committed to the principle of judicial engagement to say what the law is, rather than what the executive branch thinks it ought to be.

King concerns the IRS’s interpretation of a section of the ACA concerning tax credits for buying health insurance from government-operated insurance exchanges. Wishing states to set up their own exchanges but lacking constitutional authority to force them to do so, Congress used a carrot-and-stick approach, authorizing tax credits to help qualifying individuals purchase health insurance “through an Exchange established by the State.”

As a failsafe, the ACA required the Secretary of Health and Human Services to create federally operated exchanges in states that declined to set up their own. When 34 states declined to establish their own exchanges, the IRS decided that it would issue tax credits through federal exchanges, despite a lack of explicit authorization in the ACA’s text. It has been doing so since January 1st, 2014. The question is whether the ACA actually permits it to do so.

Why did the IRS think that it had such authority? In finalizing its rule, the IRS stated that its interpretation of the ACA was “consistent with the language, purpose, and structure of section 36B [of the ACA] and the Affordable Care Act as a whole.” The IRS invoked “statutory language” and “legislative history” as supporting its position without specifying what statutory language or legislative history supported its position. Thus, the IRS did not provide a reasoned explanation for its actions–it acted arbitrarily.

Despite the government’s efforts to paint the relevant text of the ACA as ambiguous, the meaning of the text is in fact clear. The law says the tax credits go only to people to purchase insurance on an “Exchange established by the State.” The ACA expressly provides that “‘State’ means each of the 50 States and the District of Columbia.” Congress knew how to provide that non-state entities be treated as states–in fact, it did so elsewhere in the ACA, providing that a federal territory that establishes an exchange “shall be treated as a state.” It did not do so in this context. As Justice Alito put it at oral argument on Wednesday, “If Congress did not want the phrase ‘established by the State’ to mean what that would normally be taken to mean, why did they use that language?” Seeking to defend the IRS’s rule, Solicitor General Donald Verrilli bobbed and weaved but could not give a satisfactory answer, leading Justice Kennedy to observe that his arguments “seem(ed)… to go in the wrong direction.”

The Supreme Court has consistently held that agencies cannot rewrite congressionally enacted statutes under the pretense of implementing them. Last year, in Michigan v. Bay Mills Indian Community, the Court refused to engage in a “holistic” interpretation of the Indian Gaming Regulations Act to allow the state of Michigan to enjoin illegal gambling that did not take place on Indian lands. As Justice Kagan put it, writing for the Court, “This Court has no roving license, in even ordinary cases of statutory interpretation, to disregard clear language.” The language at issue in King, considered in context, is clear, and that meaning should prevail.

Why does it matter that the ACA be taken to mean what it says? What is at stake? Nothing less than the rule of law–the existence of a legal order characterized by a clear, non-contradictory, and stable rules that are general in scope and bind government officials no less than ordinary citizens.

If written laws can be revised after the fact by unelected bureaucrats who do not treat them as imposing any genuine constraints, we do not have the rule of law; instead, government officials can simply employ whatever reasoning they like (or none at all, as the IRS appears to have done here) in order to further whatever ends they think desirable. To allow the current administration to transform “X” into “not X” is to move us closer to that precipice. The “victors” today will be victims of unchecked government power tomorrow.

In order to defend the rule of law, the Supreme Court must engage with the law as written. It must seek the truth concerning the political choices and tradeoffs manifested in the ACA itself. As Thomas Paine once put it, “In America, the law is king.” In King, the Court must make plain where the authority lies.

ABOUT EVAN BERNICK

Evan is the Assistant Director of the Center for Judicial Engagement at the Institute for Justice, a libertarian public interest law firm.

EDITORS NOTE: This article originally appeared on The Huffington PostThe featured image is courtesy of FEE and Shutterstock.

Rubio: On Tax Day 2014

U.S. Senator Marco Rubio (R-FL) on Tax Day 2014 notes, “Tax reform is critical. And it’s not just critical to take the hassle out of our lives. It’s critical for the economic future of our country. Our economy is stagnant. It’s not growing fast enough. It’s not creating enough jobs. And by the way, about 40% of the jobs that it is creating pays $16 an hour or less.”

Is reform of the tax code needed or a scraping of the entire income tax? Many are calling for either a flat tax or FairTax system.

To mark Tax Day 2014, Rubio sent out the below video addressing constituent concerns about the broken tax code system. Rubio points to the tax codes stifling effect on the economy as proof of the need for tax reform:

[youtube]http://youtu.be/RteG2ceXtk8[/youtube]

In the video, Rubio outlines various disconcerting facts about the increasingly complicated tax code and the unnecessary burdens it places on taxpayers:

  1. It takes 13 hours for the average taxpayer to file their taxes, including record keeping, planning, as well as filling out forms.
  2. Last year, Americans spent 6.1 billion hours and $168 billion complying with all their tax filing requirements.
  3. The tax code, rules and regulations now totals more than 73,000 pages, as opposed to 400 pages when it was created in 1913.
  4. Americans will pay $3 trillion in federal taxes and $1.5 trillion in state and local taxes this year.
  5. Americans must work 111 days this year to pay their federal, state and local taxes.

Rubio:

“One of the things holding back our economy is a broken tax code. We have a tax code, for example, that punishes companies for investing their profits back into their businesses, to hire more people, to give their workers raises, to expand their operations. We have a tax code that actually encourages our employers to take their business overseas. Those are some of the things we have to fix as well. So I agree with you wholeheartedly, and that’s why I hope this November we’ll have new leadership here in Washington that will move on this important item.”

RELATED STORY: Obama has Proposed 442 Tax Hikes Since Taking Office