Of the many arguments regarding the unconstitutionality of the Health Care Act, its containing an un-apportioned Capitation tax is the strongest.

Article 1, section 9 of the U.S. Constitution provides:

No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

As the Supreme Court correctly explained in Knowlton v. Moore, 178 U.S. 41 (1900), Congress may levy either direct or indirect taxes.  Direct taxes must be apportioned among the states by population.  Indirect taxes must be uniform.  The Constitution specifically authorizes indirect levies such as duties, imposts, and excise taxes.   In 1913, the 16th Amendment authorized an income tax without apportionment, essentially treating it as an indirect tax, which merely requires uniformity.

In the 1900 case, the Court approved as constitutional an inheritance tax, which it referred to, interestingly, as a “death tax.”  Such a tax was an excise tax because Congress levied it on the activity of transferring wealth at death.  It was not, as the Court explained, a tax on property or a person or income, each of which would not be an “excise tax,” but instead would be a direct tax necessitating apportionment.

The Patient Protection and Affordable Care ACT of 2010 requires all individuals – whom it inconveniently refers to as “taxpayers” – to pay a “penalty” on their failure to act, i.e., on their failure to purchase proper health insurance or to enroll in a proper plan.  I know of no case describing inactivity as the type of transaction or action which can be the subject of an excise tax; indeed, I doubt such a case exists.

Certainly, the “penalty” is not a “duty” or an “impost” and is not constitutional under either of those terms.  Hence, in my opinion, the only thing the “penalty” can be is a direct tax and, more particularly, a Capitation or per person tax.  Such a tax is constitutional, but only if apportioned among the states consistent with the census.This Lack of Health Care Tax is not properly apportioned.Hence it is unconstitutional.

Consider this: Massachusetts arguably provides proper insurance to all residents (or citizens, domiciliaries or whatever the requisite connection); hence, no individual in Massachusetts would be liable for the Lack of Health Care Tax on inactivity.  Florida, however, does not provide or require proper insurance; hence, some Floridians will be liable for the flat $750 failure-to-act Lack of Health Care Tax.  That is unconstitutional because it is not apportioned among the states.  If 5% of the Florida population must pay the tax, then the same portion of all states’ populations must also pay the tax – the burden must fall equally upon the states, at least per capita; otherwise, it is not apportioned among the states.Such a direct tax cannot favor either the wealthy or the poor states, as explained by the Supreme Court in Knowlton.The Lack of Health Care Tax, however, will unduly affect – disproportionately affect – less wealthy states.

Proponents have three possible defenses to the Capitation attack:

1.The Health Care Tax is not a tax and thus not subject to apportionment or uniformity under Article I.

Congress placed the “penalty” in the Internal Revenue Code.While called a “penalty,” the provision appears in new section 5000A of Subtitle D, which deals with excise taxes.As such, it is more a tax than a “penalty.”Indeed, the Act uses the term “taxpayer” 119 times.Also, the new provision clarifies that it is not a criminal penalty per section 5000A(g)(2)(A).That eliminates any claim it is a criminal statute rather than a civil tax.

Further, per section 5000A(g)(1), the penalty//tax is to be assessed and collected as an “assessable penalty” under Chapter 68 of the Code.Per I.R.C. section 6671, assessable penalties “shall be assessed and collected in the same manner as taxes.” (Emphasis added). While having differing names, “Additions to Tax,” “Additional Amounts,” and “Assessable Penalties” are all “taxes” under the Code. Also, with inapplicable exceptions, section 6671 provides “any reference in this title [Title 26 of the United States Code, a.k.a, the Internal Revenue Code] to “tax” imposed by this title shall be deemed also to refer to the penalties and liabilities provided by this subchapter.” (Emphasis added). Hence the face of the new law – as well as the current Code – deems this to be a “tax.”The Act refers to the Lack of Health Care Tax as a tax and provides that it is assessed and collected as a tax on “taxpayers.”Hence the potential “this is not a tax” argument is laughable.Of course the Lack of Health Care Tax is a tax.Perhaps some people could argue otherwise with a straight face, but they’d better be good actors.No ethical attorney can make such a frivolous argument.Apologists for the Act must eat the words of Congress . . . namely “tax” and “taxpayer,” as well as the placement in the Internal Revenue Code.

2.The Health Care Tax is a tax, but it is an excise tax and thus must only be uniform, which it is.

While the face of the statute deems the Lack of Health Care Tax to be an excise tax, it is not an excise tax as provided by Article I Section 9 of the Constitution.It is not a tax on the use of property or on an activity or transaction; rather, it is a tax on inactivity – a tax on nothing.If this is an excise tax, then it essentially taxes breathing.It thereby guts the “capitation” provision of the Constitution. Thus, of course, the argument is ridiculous.

Hence, the defense “this is a uniform excise tax” is also not credible; indeed, it is worse than disingenuous: it is at best a cynical attempt to gut the plain language of Article I.Other than the self-serving label placed upon the tax by Congress, this is nothing like any existing excise tax. Current excise taxes apply, inter alia, to alcohol, tobacco, gasoline, tires, telephone usage, and political activity by charities, self-dealing by disqualified persons and Private Foundations, and Excess Benefit Transactions of Public Charities.Common to all such excise taxes is the presence of some thing or some activity.Arguably, section 4942 applies to the failure of a Private Foundation to distribute sufficient income; however, such an argument lacks merit as an example of a tax on inactivity.Instead, section 4942 imposes a tax on the retention or accumulation of income or wealth – an action and a far cry from a tax on breathing.

The potential claim that the Lack of Health Care Tax is indeed a new kind of “excise tax” would perhaps be a bit more than frivolous – because breathing is at least minimally an activity – but not by much.I’m not quite ready to state an attorney should be subject to sanctions for making this argument, but were I the judge, I’d consider it.

To sum it up: a tax on breathing is not an “excise” in any credible construction of Article I; instead, it is a head tax – a capitation tax – which must be apportioned among the states, which this one is not.

3.The Lack of Health Care Tax is an Income Tax and thus Constitutional under the 16^th Amendment.

While the $750 tax is partially a function of a taxpayer’s or household’s income, that is only for purposes of providing a reduction in the amount for those who cannot afford the tax.Otherwise, it is a flat $750, which is a textbook example of a head tax or capitation tax.Imposing the partial income function element on the tax appears to be a direct attempt to hide this under the guise of an income tax.But, the face of the statute refers to it as other than an income tax – as an excise tax in Subtitle D rather than in Subtitle A, which deals with Income Taxes.Plus, the income effect merely permits a reduction in the otherwise flat head tax.

This is not a tax on income; instead, it is a flat tax which allows a credit for people with low income.Thus the income consequence is negative rather than positive: a benefit as a function of income rather than a detriment.Perhaps one could call it a negative income tax for some persons; however, for those subject to the $750, it is a head tax unrelated to income.A flat poll tax could have exemptions and still be properly apportioned; this one, however, is not.

Thus the “this is an income tax” defense is not credible.The argument may pass the “laugh” test and be a tad more than frivolous, but it should not convince anyone who is not congenitally gullible.

I agree with the state sovereignty and commerce clause attacks; however, I have concerns about them being winnable.  In contrast, I’ve not yet see a colorable flaw in the capitation attack. It should succeed.