Mandate not a tax, Obama's budget director says

John O'Brien Feb. 15, 2012, 2:58pm


WASHINGTON (Legal Newsline) - President Barack Obama's acting budget director has said that the challenged mandate in federal health care reform is not a tax, a stance in contrast to the legal position taken by the Obama administration.

Jeffrey Zients made the comment in a hearing of the House Budget Committee, according to the Washington Examiner. The administration has maintained that it had the power to impose a mandate which requires individuals who do not purchase health insurance to pay a yearly penalty because the mandate is acting as a tax, and that Congress has the authority to create taxes.

Rep. Scott Garrett, R-N.J., grilled Zients for a minute on the administration's stance that no new taxes would be imposed on households that make $250,000 or less.

"That's not a tax?" Garrett asked about the mandate, which requires an annual $695 payment.

"No," Zients responded.

"I just wanted to be clear on that because that's not the argument the administration is making," Garrett said.

The U.S. Supreme Court will hear arguments in the challenge to health care reform in late March. More than half the states have challenged the law.

The states argue that Congress' power to tax does not authorize it to force individuals to buy specific insurance products. Joining them in the challenge is the National Federation of Independent Business.

After oral arguments in Florida in 2010, Karen Harned, the executive director of NFIB's Small Business Legal Center, said, "They have tried to distract the court from evaluating the important constitutional issue at stake by challenging the parties standing and by conveniently relabeling the controversial individual mandate as a tax -- despite repeated assurances from the president himself during the legislative debate that the mandate is absolutely not a tax," she said.

In June 2010, the federal government wrote in its motion to dismiss the challenge that the minimum coverage provision does not impose a tax on property.

"It instead imposes a tax on the choice of a method to finance the future costs of one's health care, a decision made against the backdrop of a regulatory scheme that guarantees emergency care and requires insurance companies to allow people to purchase insurance after they are already sick," the motion said.

"The penalty is imposed monthly, and each month gives rise to a new taxable event: the individual's decision whether to obtain qualifying health insurance."

Later in the motion, attorneys said the mandate's penalty is not a "direct tax."

From Legal Newsline: Reach John O'Brien by e-mail at

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