That’s one conclusion you could draw from George Mason University law professor Ilya Somin’s analysis of Liberty University v. Geithner, one of the two lawsuits challenging the federal health care law that the U.S. 4th Circuit Court of Appeals tossed out Thursday. (PDF of opinion here.)

Most of the media coverage focused on Virginia v. Sebelius, which was filed by more than two dozen states, and several private parties. In it, a three-judge panel of the court said that, as a state government, Virginia lacked standing to sue. Somin said this ruling doesn’t mean much because there are a host of anti-mandate suits that were filed by private parties. But Somin said Liberty is a more interesting case and may actually have a difficult time surviving appeal at the Supreme Court.

The majority argued that financial penalties in the bill for those who refused to purchase insurance under the individual mandates were taxes. Under the federal Anti-Injunction Act, an individual cannot challenge the legality of a tax until he has been forced to pay it. The mandate doesn’t take effect until 2014, so any lawsuits challenging the mandate are premature.

But in his concurring opinion, Judge James Wynn, who was appointed to the circuit court by President Obama and confirmed last year, goes further. Wynn, a former N.C. appeals court judge and Supreme Court justice, argued that the individual mandate was a tax under the Constitution. Writes Somin,

He has thereby become the first of the eleven federal judges who have considered this question who endorsed the constitutional tax argument. The other ten judges (including Judge Davis) all concluded that the mandate is a regulatory penalty, not a tax. Obviously, if the federal government wins on this point, the mandate would be constitutional even if it is not authorized by the Commerce Clause or the Necessary and Proper Clause.

Somin finds problems with that conclusion.

As recently as 1996, the Supreme Court reiterated the crucial distinction between a penalty and a tax. It ruled that “[a] tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the Government,” while a penalty is “an exaction imposed by statute as punishment for an unlawful act” or — as in the case of the individual mandate — an unlawful omission. The individual mandate is a clear example of a penalty, where Congress requires people to purchase health insurance, and then punishes them with a fine if they fail to comply.


Even if the individual mandate does somehow qualify as a tax, it is not one of the types of taxes that Congress is authorized to impose. The Constitution gives Congress the power to enact several types of taxes: Excise taxes, duties and imposts, income taxes, and “direct taxes” that must be apportioned among the states in proportion to population.

No one, including the federal government, claims that the individual mandate is a duty or an impost. The individual mandate is not an income tax because an income tax must target some “accession to wealth,” in the words of Commissioner of Internal Revenue v. Glenshaw Glass Co., the leading Supreme Court case on the subject. The fine imposed by the mandate does not target any accession to wealth or flow of income. It simply forces individuals to pay a penalty if they disobey the federal government’s regulatory requirement. The fact that low-income individuals are exempted does not change this analysis. A fine for jaywalking would not become an income tax if low-income individuals were exempted from it…..

It is even more implausible to suggest that the mandate is an excise tax. Excise taxes apply to economic transactions or the use of property of some kind. For example, a tax on the sale of alcoholic beverages qualifies as an excise. The individual mandate does not tax any kind of activity, use of property or economic transaction….

If the mandate is not a tariff, impost, income tax, or excise tax, it is either a direct tax or no tax at all. And if it is a direct tax, it would be an unconstitutional one, because it is not apportioned among the states in proportion to population as the Constitution requires.

Somin notes that the individual mandate may well stand, but it almost certainly won’t be for the reasons Wynn cited.