Government’s Power of Taxation Appears All-Encompassing

Tuesday, July 31, 2012

Page 6

IN MY OPINION (Column)

Government’s Power of Taxation Appears All-Encompassing

By GERT K. HIRSCHBERG

(The writer is a retired trial lawyer, an American Board of Trial Advocates member since 1978 and a former professor of torts at five California law schools. He counts 4,000 of his former students among California’s lawyers and judges. He was presiding referee of the Disciplinary Board, later called the State Bar Court. He is a former member of the State Bar Board of Governors—1980 to 1983—and the Judicial Council of California.)

A Hollywood casting director would not ever select John Roberts to play the part of a Chief Justice of the highest Court of the land. He does not look like Charles Evans Hughes; he is not old; he is photogenic; he is handsome; he resembles the handsome lead in a Hollywood movie more than the lead of a contested judicial decision which shocked the nation.

Chief Justice Roberts’ decision may, most likely, affect the 2012 national election and thereby the Presidency of the United States. Writes the Chief Justice in affirming the Affordable Care Act, the failure to purchase health insurance is enforced by a fine which is not really a fine, but a tax. So what is all the hullabaloo? Who cares? Only those with some training or knowledge of constitutional law and history.

Historically, the thirteen independent states came first. They severed their relationship with the British Empire, evidenced by the Declaration of Independence. They remained independent. Yes, they admitted new and equally independent states so that today we can count fifty such states. The point to remember is that the states were independent. They did form a union which became the United States of America. This union laid out its rules of association through the Constitution. The important thing to remember is the states came first, their union and the bonding was accomplished through the Constitution. What powers did these independent states surrender to the new union? Only those powers which were enumerated by the document called the Constitution. That is why one must look to the Constitution to determine whether there exists a power to enact the Affordable Care Act.

Following more than two centuries of legal gyrations, including amendments to the Constitution, it became clear that the power to tax is one of the powers which the people had delegated to the federal government. That power need not be exercised wisely, but it belongs to the government. That, in essence, was the view of Chief Justice Roberts in support of his tie-breaking fifth vote.

The other issue, not decided by the tax argument, is whether the mere fact of calling this a tax clouds the issue of whether this law constitutes an unlawful regulation of business and commerce. We Americans have a built-in hostility to government regulation. It is this “John Wayne” approach which forms the basis of our fear of government regulation and even the 2nd Amendment right to bear arms regulation. The real issue then is whether the anti- Lochner approach of the Supreme Court can carry the day for the extension of the tax power.

Lochner v. New York (198 US 45 1905) was the high mark of government regulation. It invalidated a New York statute which regulated the working hours of bakers in New York. This was a win for laissez faire and Adam Smith, high-lighted by President Franklin Roosevelt’s abortive attempt to pack the Supreme Court. This did not recede until the late days of the New Deal and , if ever it gasped for fresh air, it was put to its final resting place by Chief Justice Roberts in his opinion in the Affordable Care Act.

There was more to the Affordable Care Act than the power to tax. The act also seeks to regulate coverage for pre-existing illnesses and in situations where youngsters seek coverage when returning to the homes of their parents. Were these issues superseded by the tax argument? Yes, which shows the strength of the government’s power of taxation. It appears all-encompassing.