The Dark Knight (of Taxing) Rises

In an effort at once to sympathize with those who find themselves in the minority and to recognize respectable reasoning through a topic when it arises, I reproduce in full today's rather lengthy editorial in The Wall Street Journal.

A Vast New Taxing Power

The Chief Justice's ObamaCare ruling is far from the check on Congress of right-left myth.

The commentary on John Roberts's solo walk into the Affordable Care Act wilderness is converging on a common theme: The Chief Justice is a genius. All of a sudden he is a chessmaster, a statesman, a Burkean minimalist, a battle-loser but war-winner, a Daniel Webster for our times.

Now that we've had more time to take in Chief Justice Roberts's reasoning, we have a better summary: politician. In fact, his 5-4 ruling validating the constitutional arguments against purchase mandates and 5-4 ruling endorsing them as taxes is far more dangerous, and far more political, even than it first appeared last week.

This is a minority view. By right-left acclaim, at least among elites, the Chief Justice has engineered a Marbury v. Madison-like verdict that camouflages new limits on federal power as a reprieve for President Obama's entitlement legacy and in a stroke enhanced the Supreme Court's reputation—and his own. This purported "long game" appeals to conservatives who can console themselves with a moral victory, while the liberals who like to assail the Chief Justice as a radical foe of democracy can continue their tantrum.

It's an elegant theory whose only flaw is that it is repudiated by Chief Justice Roberts's own language and logic. His gambit substitutes one unconstitutional expansion of government power for another and rearranges the constitutional architecture of the U.S. political system.

***

His first error is the act of rewriting the plain text of a law, instead of practicing the disinterested interpretation that is the task of the judiciary, regardless of the partisan outcome. The second error is converting the health insurance mandate's penalty into a tax. Ninety years of precedents have honed precise and widely divergent legal meanings for taxes and penalties for violating laws or regulations, and they are not interchangeable.

The Chief Justice did not simply change a label—as if Congress said something was a penalty when it was really a tax. Rather, these categories are defined by their purposes and effects, by how they operate in practice. Taxes are "exactions" whose main goal is raising revenue, while penalties punish individuals for breaking the law. The boundaries can blur—legitimate taxes may also have strong punitive aims—but scarcely so in this case. ObamaCare's mandate was designed to regulate individual conduct to help achieve universal coverage. If it succeeds perfectly, it should collect $0.

Even if Democrats had passed the mandate tax as rewritten by the Chief Justice, and they did not, the Supreme Court until Thursday has never held that Congress can call anything it wants a tax. The taxing power like the Commerce Clause is broad, and the courts are generally deferential. But all powers the Constitution enumerates are also limited, and these limits—unique to each power—must be meaningful and enforceable by the legal system.

The Chief Justice's compounding errors deprive the taxing power of any viable limiting principles. Article I, section 8 gives Congress an independent grant of 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." Taxes must originate in the House, the political body designed to be most responsive to voters. There are also important additional safeguards on the type of exactions known as "direct taxes."

Indirect taxes—"duties, imposts and excises"—are taxes on activities and products. They are passed on by a seller, triggered by a transaction and more or less optional: Consumers don't have to buy taxed goods and services. Direct taxes, on the other hand, are those that the federal government is empowered to impose on individuals as citizens. They cannot be avoided because they are levied on the existence of people.

America has its origins in a rebellion against arbitrary and pernicious taxation and the Framers wanted to make it extremely difficult to impose or raise direct taxes. These can easily morph into plenary police powers, the regulation of private behavior and conduct that the Constitution vests in the states. For this reason, while the taxing power in addition to raising revenue can achieve regulatory results, those regulatory results must be constitutional themselves.

***

That boundary held for 225 years until Thursday's ruling, as the Court had repeatedly struck down Congress's efforts to arrogate to itself police powers under either the Commerce Clause or the taxing power. The Chief Justice ruled instead that the mandate was an unconstitutional exercise of federal police powers under the Commerce Clause, only to transform the taxing power into a license for the federal government to impose taxes whose defining feature is commanding people as members of society.

Chief Justice Roberts concedes that "Congress's ability to use its taxing power to influence conduct is not without limits" and that in the 19th and early 20th centuries the Supreme Court "policed these limits aggressively, invalidating punitive exactions obviously designed to regulate behavior otherwise regarded at the time as beyond federal authority." But then he writes that "more recently we have declined to closely examine the regulatory motive or effect of revenue-raising measures."

His error—or more likely, his deliberate sleight-of-hand—is that this modern jurisprudence does not deal with direct taxes but indirect taxes and income taxes. Income taxes were authorized in 1913 by the Sixteenth Amendment, which was necessary to bypass the other important limit on direct taxes, called apportionment.

The Constitution says that "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken." Colloquially, direct taxes are known as head taxes and they must be spread among the states according to population. Apportionment's onerous limits were meant to protect against abuse and sectional favoritism. If Congress uses direct taxes, the residents of South Carolina will pay the same overall share as Massachusetts, and so forth.

But apportionment would defeat the mandate tax's "whole point," the Chief Justice writes, since every state will have a different percentage of citizens that are uninsured. So he cryptically rules that "A tax on going without health insurance does not fall within any recognized category of direct tax."

But if not a direct tax, then what kind of tax is it? It is not an indirect tax because it applies to a failure to purchase something, what the Chief Justice calls "an omission," not an optional transaction. It is not a tax on income because that merely hits "accessions to wealth," not what people choose or choose not to do with those accessions.

The result is that Chief Justice Roberts has created the only tax in U.S. history that exceeds its own constitutional limits and is meant to execute powers that the Court otherwise ruled were invalid. His discovery erases the limiting principle—apportionment—that constrains the taxing power for everything besides income and excises.

In the process, Chief Justice Roberts has hollowed out dual federal-state sovereignty and eviscerated the very limit on the Commerce Clause that he posits elsewhere in his opinion and that has some conservatives singing his praises. From now on, Congress can simply regulate interstate commerce by imposing "taxes" whenever someone does or does not do something contrary to its desires.

The Chief Justice seems to understand this, so he tries to articulate his own new limiting principle for the tax power. His mandate tax isn't a mandate but merely a suggestion: choose to buy insurance or "pay money into the Federal Treasury, no more," an act he likens to a tax on gasoline. He also temporizes that "taxes that seek to influence conduct are nothing new."

True enough, but the punishments in the tax code for inactivity come in the form of not being able to claim benefits that Congress in its graces bestows. Such as: If you don't borrow to buy a home, you don't get a mortgage interest deduction.

Congress has never passed a tax on a lack of gasoline or a tax on a failure to buy gasoline, any more than Congress can regulate inactivity under the Commerce Clause by telling people to buy gasoline or else pay a penalty. The reality is that Washington would love to regulate the ordinary economic choices that used to be beyond its purview, and now it will be able to abuse the ad hoc "tax" permit that the Chief Justice has given it.

***

The John-Roberts-as-Daniel-Webster school argues that the long-term limits on the Commerce Clause and other aspects of the ruling are a good trade for the loss of upholding ObamaCare, and government excess has now reached its high-water mark and will recede over time. That false hope seems unlikely given the subversion of the taxing power and unleashing a general federal police power. This is equally harmful to liberty and dual sovereignty.

One possible saving grace is that this center-right country remains suspicious of taxation, and therefore the Chief Justice increases accountability somewhat through truth-in-labeling. But note how Democrats are already claiming that the ObamaCare mandate is not really the tax that is the only reason it was upheld.

White House chief of staff Jack Lew said Sunday that "The law is clear. It's called a penalty." Neither sentence is true. On Friday, the Obama re-election "truth team" was even less subtle in a memo titled "They're lying about ObamaCare" that made the same claim. Chief Justice Roberts has created a creature that is not a tax for political purposes but is a tax for constitutional purposes.

Chief Justice Roberts's ruling is careless about these bedrock tax questions, and they are barely addressed by either the Court's liberal or conservative wings. His ruling, with its multiple contradictions and inconsistencies, reads if it were written by someone affronted by the government's core constitutional claims but who wanted to uphold the law anyway to avoid political blowback and thus found a pretext for doing so in the taxing power.

If this understanding is correct, then Chief Justice Roberts behaved like a politician, which is more corrosive to the rule of law and the Court's legitimacy than any abuse it would have taken from a ruling that President Obama disliked. The irony is that the Chief Justice's cheering section is praising his political skills, not his reasoning. Judges are not supposed to invent political compromises.

"It is not our job," the Chief Justice writes, "to protect the people from the consequences of their political choices." But the Court's most important role is to protect liberty when the political branches exceed the Constitution's bounds, not to bless their excesses in the interests of political or personal expediency or both. On one of the most consequential cases he will ever hear, Chief Justice Roberts failed this most basic responsibility.

A version of this article appeared July 2, 2012, on page A10 in the U.S. edition of The Wall Street Journal, with the headline: A Vast New Taxing Power.

Reminders

Big picture reminders are sometimes necessary.  For instance:

• what is legal is not always just;
• what is permitted is not always prudent; and
• what is required is not always right.

A tad more than a $6,300 fine

This article in today's The New York Times about a Chinese woman's pregnancy and the government's decision to execute her child touches on some topics I raised in previous posts this month (first here and then here).

Enduring Classical Benefits

In a recent post, I drew attention to a political and ethical tension:  the government's position in the United States to permit gendercide (or female foeticide), which is legal, and the ostensible position of the United States government with respect to other countries regarding the same permitted termination of life, which the Secretary of State has said should be prohibited.

Shortly after making that blog entry, I ran across the following discussion of ethical matters in ancient Greece.  It has to do with the development of moral theory and practice from Homeric myth to fifth-century Athens.  In his A Short History of Ethics, Alasdair MacIntyre discusses the tug of war between nomos (law, custom, convention) and physis (nature), the order of society and the order of the universe, as it relates to one's understanding of virtue and moral expressions within cultures and across them.  I take it that this tug of war is parallel to the tension in the U.S. domestic approach to gendercide through selective abortion and its foreign approach to the same question.

I mention Prof. MacIntyre's discussion for another reason.  It is often asked, Of what benefit or enduring significance are the humanities and especially the study of classics?  One answer might be that such study helps us to understand ourselves, our institutions, and our moral theory and practice -- and to make informed judgments about them -- in ways that we might not do without classical knowledge and some reflection.

I offer the following, then, as evidence of the enduring benefits of a classical education.  The tension in the U.S. is not new.  The Athenians, too, were conflicted.  Who knew, right, that an account of the development of moral reasoning in ancient Greece could be, well, just so relevant to contemporary discussions?  It is.  What, then, might we learn about justice from their experience and moral investigations that can help to improve ours?

Between Homer and writers five centuries later there is a great change in Greek myths about the order of the universe.  The Homeric myth does reflect, though with much distortion, the workings of an actual society in which a close form of functional organization is presupposed by the moral and evaluative forms of appraisal which are in use.  The later assertions of order in the universe reflect not a structure that is, but one that was, or one that is struggling to survive.  They are conservative protests against the disintegration of the older forms and the transition to the city-state.  The myths themselves cannot but open up the question of the difference between the order of the universe and the order of society.  But above all, this question is sharpened by a widening awareness of radically different social orders.

         The impact of the Persian invasions, of colonization, of increase in trade and therefore in travel, all these brings home the fact of different cultures.  The result is that the distinction between what holds good in Egypt but not in Persia, or in Athens but not in Megara, on the one hand, and what is the case universally as part of the order of things becomes overwhelmingly important.  The question asked about any moral rule or social practice is, Is it part of the essentially local realm of nomos (convention, custom) or of the essentially universal realm of physis (nature)?  Linked to this is of course the question, Is it open to me to choose what rules I shall make my own or what restraints I shall observe (as it may be open to me to choose which city I shall live in and what therefore shall be the nomos by which I live)? or does the nature of the universe set limits upon what I may legitimately choose?  (MacIntyre, Short History, 10-11)

… Different cities observe different customs and different laws.  Does and should justice differ from city to city?  Does justice hold only within a given community between citizens? or should it hold also between cities?  The Athenians condemn the character of Alcibiades because he did not observe the restraints of dikaiosune in his behavior within the Athenian state.  But their own envoys behave just like Alcibiades in their attitude toward other states.  That is, they equate what is morally permissible with what the agent has the power to do. (MacIntyre, Short History, 11-12)

Initiative in the Poverty Debate

These days, questions about justice, particularly that nebulous but ubiquitous term social justice, turn in my hearing mostly on the basic structure of life in the United States.  It is a structure, it is claimed, that in its very fabric is unjust.  Therefore, the unjust social fabric ineluctably results in inherently unequal opportunities, not to mention also unequal outcomes.  A case in point, frequently offered as Exhibit A, is poverty.

Without discussing now the philosophical postulates about justice that this prevailing view reflects, I was struck by a report of Congressional testimony that was given last week on the subject of poverty.  The Wall Street Journal reproduces in today's edition the following remarks by Ron Haskins of the Brookings Institution. (The Brookings Institution is generally considered a center-left think tank in Washington, D.C.)  Mr. Haskins's point:  certain behavior is an extremely accurate predictor of adult poverty or, alternately, general economic success.

His testimony does not deny environmental challenges (and one should readily admit them), but it does underscore, more than I believe is often acknowledged in philosophical and policy debates, the key role of individual responsibility.  (We might say communal responsibility for its individuals.)  This effort, as he describes it, seems to me to have at least one unifying moral quality:  discipline, or self-control.  Specifically, it is the self-control required in pursuing education, work, and family.

Whatever one may think of Mr. Haskins's view, the Census data that he provides must be part of the ongoing political, economic, and moral debate.  (The full transcript of his Senate testimony may be found here.)

Brookings Institution Senior Fellow Ron Haskins testifying before the Senate Finance Committee, June 5:

I want to emphasize the importance of individual initiative in reducing poverty and promoting economic success. Young people can virtually assure that they and their families will avoid poverty if they follow three elementary rules for success—complete at least a high school education, work full time, and wait until age 21 and get married before having a baby. Based on an analysis of Census data, people who followed all three of these rules had only a 2% chance of being in poverty and a 72% chance of joining the middle class (defined as above $55,000 in 2010). These numbers were almost precisely reversed for people who violated all three rules, elevating their chance of being poor to 77% and reducing their chance of making the middle class to 4%.

Individual effort and good decisions about the big events in life are more important than government programs. Call it blaming the victim if you like, but decisions made by individuals are paramount in the fight to reduce poverty and increase opportunity in America. The nation's struggle to expand opportunity will continue to be an uphill battle if young people do not learn to make better decisions about their future.

A version of this article appeared June 11, 2012, on page A13 in the U.S. edition of The Wall Street Journal, with the headline: Notable & Quotable.

Contemporary Moral Dieting

David Brooks has a good column in today's The New York Times:  "The Moral Diet." 

In it, he discusses key points in a new book by Dan Ariely, The (Honest) Truth About Dishonesty.

(For those with online user access, Mr. Ariely is also interviewed by The Wall Street Journal in this 20-minute video, posted last night.  The Duke University professor also penned this May 26 essay, "Why We Lie," in The Wall Street Journal.)

Mr. Brooks finds fascinating the presently prevailing Good Person Construct, which is a shift from moral conceptions that prevailed in the past:

But these days, people are more likely to believe in their essential goodness. People who live by the Good Person Construct try to balance their virtuous self-image with their selfish desires. They try to manage the moral plusses and minuses and keep their overall record in positive territory. In this construct, moral life is more like dieting: I give myself permission to have a few cookies because I had salads for lunch and dinner. I give myself permission to cheat a little because, when I look at my overall life, I see that I’m still a good person.

The Good Person isn’t shooting for perfection any more than most dieters are following their diet 100 percent. It’s enough to be workably suboptimal, a tolerant, harmless sinner and a generally good guy.

Obviously, though, there’s a measurement problem. ...

As we go about doing our Good Person moral calculations, it might be worth asking: Is this good enough? Is this life of minor transgressions refreshingly realistic, given our natures, or is it settling for mediocrity?

There is a measurement problem, and successful pursuit of virtue, I too fear, indeed is now defined by mediocrity.

But there is also perhaps another problem.  Is this moral pursuit to be conducted within the limits of individual human effort alone?

Mr. Brooks discusses Mr. Ariely's book in terms that may be true to the author's approach.  I have not read the book, so I cannot say.  But the language pervasive in the column about moral pursuit, and the Good Person Construct in particular, is decidedly individualistic.  It is about "moral self-image," what I do on my moral diet.  It is not about forces or agents outside of me that, in concert with me, are critical to solving the measurement problem, or the mediocrity problem, or the "good enough" question.

Maybe we need perspective and help from outside of ourselves to find our real moral selves -- and rightly to appraise what moral rectitude actually is.

 

Safe, Legal, and Targeted

Is it morally permissible to terminate a human life based upon that life-holder's sex (male or female) as long as the decision to terminate is free rather than forced?

This is essentially the question that was voted on in the U.S. House of Representatives yesterday.  Technically, the question was the legality, not the morality, but never mind since those are confused in promulgating legislation that is supposed to reflect society's sense of justice, or what is right, which is to say what is moral.  Congress took up the question of selective abortion -- i.e., the termination of the life -- of a healthy and developing human fetus based on sex, especially if the baby is female.

The answer that Congress gave in its procedural way was yes.  Freedom of one's individual will is so important, evidently, that it allows one legally to discriminate lethally against another.  Free termination of a life based upon sex discrimination is legally permissible.  The message of the government, then, is that it is morally acceptable in the United States.

Perhaps reflecting home country bias, forced and frequently selective termination as practiced, for example, in China and India, is, however, not acceptable -- in fact it is condemnable -- according to U.S. standards.  This practice in China and India is commonly called gendercide, or female foeticide.  The definition includes the deliberate determination to commit the killing act.  Whether one party is forced or free, a deliberate determination to kill an innocent is made.

Secretary of State Hillary R. Clinton has said that this termination of a female life based on the fact that the child is female should be stopped:

Obviously, there’s work to be done in both India and China, because the infanticide rate of girl babies is still overwhelmingly high, and unfortunately with technology, parents are able to use sonograms to determine the sex of a baby, and to abort girl children simply because they’d rather have a boy.

So has the typically ineffective United Nations.

This raises a number of moral questions that relate to very practical considerations of wisdom:

• Should one's individual freedom of decision be held in such high esteem that the state entrenches lethal sexual discrimination of females?
• Could one legitimately call these targeted killings?
• Why is the practice in one country acceptable but not in another?
• What is the real "war on women"?