Hobby Lobby and the Fall Campaigns

ObamaCareby Jon N. Hall    5/12/14
By “rewriting” ObamaCare in NFIB v. Sebelius, the Supreme Court created a strange new twist on federal taxation: they imposed a surtax on the poor. The Court did that by redefining the penalty (for not having health insurance) as a tax. Usually, government levies surtaxes at the other end, on the wealthy, such as in 1993 when Congress levied a 3.6 percent surtax on the highest incomes. But with ObamaCare, an individual who has even the smallest of income tax liabilities and who hasn’t purchased health insurance can owe an additional tax as of 2014.

The smallest individual income tax liability that the IRS will fool with is $1. The smallest income in 2013 that would produce a $1 tax bill was $10,005. That $10,005 income could have been earned by an unmarried person who was under age 25 and therefore ineligible for the Earned Income Credit. After such a person subtracted his $10K personal exemption, he would be left with $5 of taxable income, which would leave him with a tax bill of $1.

Unmarried individuals who do not possess a disability are not eligible for Medicaid. So an unmarried individual under age 25 with a poverty income who hasn’t purchased health insurance will be hit by the ObamaCare surtax if he has no disabilities.

In 2014, the ObamaCare surtax for poverty-income individuals will be $95, an amount 19 times larger than the lowest possible taxable income of $5. In 2016, the surtax will rise to $695 for individuals, and $2,085 for families. That means that our unmarried taxpayer will see his effective tax rate rise from less than 0.01 percent in 2013 to more than 6.956 percent in 2016. (There’s your progressive taxation for you.)

It’s doubtful that that’s what the high court really had in mind: a new tax on those whom Leona Helmsley affectionately called “the little people.”

The surgery done on ObamaCare in NFIB v. Sebelius leaves America with a perplexing question: If the Constitution does not give Congress the power to command Americans to buy health insurance, then how can the Constitution allow Congress to tax Americans for not having done so?

Just as they hitched us to ObamaCare in NFIB, the Court could also unhitch us with their rulings on the cases headed their way. The next case to be ruled on, the Hobby Lobby case, was heard in March and is due to be decided in June. Those who think this case is too slender a reed to hang hopes on should read ”How the ACA Could Collapse,” a terrific little essay by Amity Shlaes at National Review. Ms. Shlaes chronicles a New Deal case that pitted a Jewish kosher butchery against FDR’s powerful National Recovery Administration. The Court was rather dismissive, even derisive, of the government’s defense:

When the Schechters’ lawyer, that same Heller, showed how ludicrous the regulations for chicken selection were, the justices and the whole room laughed. The same kind of slapstick humor that had worked against the butchers before now worked for them. Even the justices got in on the wordplay, writing in their 9–0 finding against the NRA that the Schechter case showed that not only the poultry code but also the entire NRA corpus must collapse, “bone and sinew.”

The stunning defeat in Schechter Poultry Corp. v. United States led to Roosevelt’s attempt to pack the Court. We’re seeing similar attempts with the federal judiciary even now.

Just as in Schechter, the Court should find for the plaintiffs in Hobby Lobby; First Amendment religious liberty cannot be sacrificed on the altar of ObamaCare.

Inasmuch as the outcome of Hobby Lobby will be known before November, one wonders how a ruling that struck down ObamaCare in its entirety would affect the upcoming elections. Perhaps it would be better for the cause of conservatism if the Court found the mandate (to provide certain types of birth control) unconstitutional but let the law stand, as they did in NFIB.

However, if the Court in June were to strike down ObamaCare in its entirety, it would change the dynamics of the midterm elections, and deprive some conservatives of a big issue in their campaigns. Indeed, Democrats running for reelection would rejoice if the Court relieved them of their ObamaCare albatross. Conservatives, libertarians, Tea Partiers, and all “right-wingers” should therefore plan their campaigns around more than just replacing ObamaCare, regardless of the outcome in Hobby Lobby.

Such political considerations are not within the purview of the Court. But striking down the entire ACA would also strike down the Court’s surtax, which some justices may regret. Taxation without representation has never been very popular in America.
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Jon N. Hall is a programmer/analyst from Kansas City. • (1609 views)

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2 Responses to Hobby Lobby and the Fall Campaigns

  1. Timothy Lane says:

    Unfortunately, taxing the poor is hardly unprecedented. Sin taxes tend to be paid disproportionately by the poor because the rich make sure that their sins aren’t so heavily punished. Cigarette and alcohol taxes are prime examples. Much of this is at the state/local level, but I would think some of these would be federal taxes.

    The Schechter case is a very familiar one for me. In my writing some years back for Salem Press, I did 4 articles for The Thirties in America, of which the case was involved in 3: a history of the National Recovery Administration (struck down by the decision in the case), a biographical article on Charles Evans Hughes (the Chief Justice who wrote the decision), and an article on “Black Monday” (the day the Court issued 3 anti-New Deal decisions, including the Schechter case). The other was on the Gold Clause cases, which was completely separate. (It helped that I had gotten a library card at the University of Louisville library, which was good at all branches — including the library at the Brandeis School of Law.)

    I don’t see a court led by John Robert striking down Obamacare over the Hobby Lobby case. A much more serious threat to the abomination will be the various cases arguing that the subsidies are valid only with the employer mandate, which is only valid if the state maintains its own Obamacare website.

  2. NAHALKIDES NAHALKIDES says:

    Jon asks, “If the Constitution does not give Congress the power to command Americans to buy health insurance, then how can the Constitution allow Congress to tax Americans for not having done so?”

    The answer is it cannot and does not, and Chief Justice Roberts’ failure to see that is truly shocking. For the Constitution is fundamentally a limitation on the powers of the Federal Government, and if government is limited then no power, not even those expressly granted by the Constitution itself, can be held to be absolute and unlimited. For example, Congress is given the power to establish post offices and post roads, but a bill to conscript labor (that is, to force anyone other than convicted criminals to labor to construct post offices and post roads) in the manner (it is thought) that the Great Pyramids were built would be blatantly unconstitutional since Congress cannot implement involuntary servitude.

    Similarly, the grant of the taxation power to Congress cannot be as seemingly open-ended as it might first appear. Congress could not levy a steep tax on, say, public speeches, or make a $100 per round tax on ammunition, for these would abridge the rights to freedom of speech and to bear arms. Even unequally-applied taxes that some must pay while others are exempt should be understood to be unconstitutional, and in a better era, they would be (perhaps they were – I’ll have to research this some time).

    As to Jon’s concern about Hobby Lobby, I think there’s a good chance the Court will strike down the HHS mandate requiring businesses to fund contraception and abortion but leave the Obamacare statute intact, because the statute did not require then-HHS Secretary Kathleen Sebelius to write the regulations in a way that squashed religious freedom, she simply chose to do so, being one of the worst thugs in the entire Obama administration, and in defiance of a statute on a legal par with Obamacare, the RFRA (Religious Freedom Restoration Act).

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