The Supreme Court's long-awaited ruling on the President Obama's health care law could come as early as Monday. All eyes are on the disputed individual mandate and what happens if the court only upholds portions of the law.
Supreme Court Justice Ruth Bader Ginsburg described the issue at hand by comparing it to dicing up vegetables. She posed the question, "If the individual mandate requiring the purchase of insurance or the payment of a penalty — if that is unconstitutional, must the entire act fall? Or may the mandate be chopped, like a head of broccoli, from the rest of the act?"
If the individual mandate does get cut, what difference would it make to uphold the rest of the law?
On Wednesday's edition of The Last Word, University of Minnesota professor Lawrence Jacobs said not a whole lot. "This is not rocket science," he told MSNBC’s Lawrence O’Donnell. "The mandate is simply not that big a deal."
Lawrence O’Donnell has been arguing the mandate in President Obama’s health care law is not really a mandate at all. Aside from a small tax penalty of a few hundred bucks under Obamacare, there’s no real enforcement mechanism in it. And what if the penalty isn’t paid? He said it's one thing to get a parking ticket; it's another thing to actually pay the parking ticket.
O’Donnell detailed the two ways in which Obama’s law addresses this issue: "In the section called 'Waiver of Criminal Penalties,' it says 'In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.'" Another key component is the "Limitations on liens and levies." That reads, “The Secretary shall not file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or levy on any such property with respect to such failure."
According to Jacobs, the mandate only affects about 1 out of 20 Americans or, maybe 2 out of 100 after the subsidies and some exceptions.
To Jacobs, "the big story here is the insurance regulations that make the insurers play fair rules so they don`t screw you, the enormous efforts to expand access to over 30 million Americans, both lower income, middle income, up to $90,000 a year for a family of four, and then a brand-new insurance exchange, kind of like a Travelocity, so you can go out there and do some comparison shopping."
Leave a Comment:
Sounds like whistling past the graveyard to me! Wothout the mandate that brings in a big block of mid 20s to mid 50s new insurance purchasers, the expensive all inclusive Government structured insurance plan with all the bells and whistles isn't going to be 1) affordable, 2) perhaps not even offered. That's the first thing to go. We'll see just what else gets cut by the insurance companies, but I have no doubt the Obama Administration will attempt to compensate on a ruling against the mandate by trying for a stimulus for the Medicaid Plans in the States again, to pick up all those unhappy folks who thought they were about to get subsidized private insurance under The Obama and the Democrats Unaffordable Care Act!
I watched this segment last night and almost fell for O'Donnell's ignorance on the matter. But alas, Lawrence is wrong again--the IRS can and will enforce the individual mandate: (from Taxprofblog)
Section 5000A(g) says that the penalty “shall be assessed and collected in the same manner as an assessable penalty.” Section 6671, in turn, provides that assessable penalties “shall be assessed and collected in the same manner as taxes.” Accordingly, unless otherwise restricted, the IRS has its entire tax collection arsenal at its disposal to enforce the penalty. Section 5000A(g) removes three weapons from the arsenal. First, it prohibits the government from prosecuting noncompliant taxpayers criminally. Second, it prohibits the IRS from using its administrative levy powers. Third, it does not allow the IRS to file a Notice of Federal Tax Lien.
Even without those three tax collection weapons, the IRS has at least three remaining powers to enforce collection of the penalty, once it makes a proper assessment. First, the IRS has the power to offset any tax overpayment made by the taxpayer against the penalty. Section 6402 allows the IRS to set off any overpayment (generally, that means tax refund) against “any liability in respect of an internal revenue tax.” Is the penalty “a liability in respect of an internal revenue tax”? Well, unless the courts tell us otherwise, Congress has said it is. The Health Care bill itself calls it an excise tax. Perhaps more importantly, however, the Health Care bill treats the penalty as an assessable penalty and § 6671 says that the term “tax” also includes assessable penalties. Either analysis brings the penalty under the § 6402 statutory setoff powers.
Even if the penalty is NOT a tax, however, the IRS can still use setoff powers to collect it. That is because the Service has both a statutory and a common law right of set-off. That is, “the government has the same right which belongs to every creditor, to apply the unappropriated moneys of his debtor, in his hands, in extinguishment of the debts due to him." United States v. Munsey Trust Co., 332 U.S. 234, 239 (1947). For example, in Cherry Cotton Mills v. United States, 327 U.S. 537 (1946), the taxpayer was due a tax refund but the IRS instead applied that amount to a non-tax debt that the taxpayer owed the Reconstruction Finance Corporation (that debt arose from a loan given the taxpayer). The Supreme Court approved that use of the set-off power as between a tax overpayment and a non-tax debt.
The second remaining collection weapon is the tax lien. Section 5000A(g) does not prevent the tax lien from arising; it says only that the IRS cannot file aNotice of Federal Tax Lien. Section 6321 provides that the tax lien itself arises automatically as a matter of law when the IRS assesses a tax, sends the taxpayer a notice and demand for payment, and the taxpayer fails to fully pay. At the time it arises, the tax lien is secret, so Congress does not allow the IRS to enforce the tax lien against certain types of creditors until the IRS puts the public on notice about the tax lien by filing a Notice of Federal Tax Lien. Nonetheless, the tax lien will arise and will attach to “all property or rights to property” belonging to the taxpayer. That includes the taxpayer’s home and any future property that the taxpayer acquires, such as inheritances. See generally Drye v. United States, 528 U.S. 49 (1999) (taxpayer’s disclaimer of inheritence under state intestacy laws could not defeat attachment of federal tax lien, which was then enforceable against the person who received the disclaimed property per state laws of distribution and descent); United States v. Craft, 535 U.S. 274 (2002) (tax lien attaches even to tenancy-by-the-entireties property held by the taxpayer with his non-liable spouse).
The third remaining collection weapon is the lien foreclosure suit. Section 7403 allows the IRS (represented by the Department of Justice) to file suit in federal court to foreclose the tax lien as against any property to which the lien has attached.
In sum, § 5000A(g) does impose some important restrictions on the IRS but does not remove them all. While it does not let the IRS to enforce the tax lien as against certain types of creditors, the lien will still exist. Similarly, while it does not allow the IRS to enforce the tax lien by administrative seizure, it does not prohibit court action. Now, it is a fair question to ask whether enforcement of the tax lien is worthwhile to the government without the ability to file a public notice of the federal tax lien or conduct administrative seizures. But the answer is not open and shut. More importantly, section 5000A(g) does not impose any restrictions on the IRS powerful offset powers, which are cheap and easy to use.
Very informative, but MSNBC's editors with their staff of legal advisors know this information perfectly, so they were quite willing to allow Little Lying Larry the luxury of his appearing ignorant of the law, for whatever benefit that gave him. It's all Show Time All The Time with this Network, Josh.
Bad week coming for Obama's reelection changes next week with the Arizona Immigration Law up, and the Nonaffordable Care Act in the Supreme Courts session ending decisions forthcoming. Then, on Monday, July 3rd we end with the month of June's Employment report, and from today/s report ofNew Unemployment Claims pushing 400,000 again, and Manufacturing output flagging downward, expect another rise in the unemployment rate, and another drop in the total labor force participation.