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US Supreme Court Arguments, Day 1: Does old Tax Law Prohibit Lawsuits on Obamacare?

by Lakshmi Gopal on March 27, 2012 at 4:12 AM
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US Supreme Court Arguments, Day 1: Does old Tax Law Prohibit Lawsuits on Obamacare?

The primary issue before the Supreme Court justices on the first day of hearings on Monday was, whether an obscure 1867 tax law, the Reconstruction-era Anti-Injunction Act (AIA), prohibited lawsuits on the federal health care law.

The rules of the game have to be first set and the fate of the case rests upon deciding the rules. This has moreover, put in jeopardy, the very fact of the case proceeding in the court, as the Internal Revenue Service (IRS) has not collected the first 'penalty' on uninsured persons yet. This may have to wait until early 2015 when the 'fine' will actually be collected.

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Such a decision by the Supreme Court could effectively stall the case for at least three more years and make enough time for the Affordable Care Act (ACA) to be implemented in full-swing, unless of course, a majority of the Congress repeals the healthcare law.

There's another issue at hand, of whether the 'penalty' is actually a 'tax'. In an interview before the law was passed, President Obama strongly objected to any suggestion it's a tax.
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However, Washington D.C. lawyer Robert Long, appointed by the Court to argue the case for invoking the AIA said it 'falls within the ordinary meaning of "tax" because it is codified in the (IRS) Code, calculated as part of the taxpayer's federal income tax liability, assessed and collected by the IRS, and paid into the federal government's general revenues.'

There is a good chance that the challenges to the healthcare law may be deemed premature in the next two days of hearing.



Source: Medindia
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