Sunday, July 1, 2012

NFIB v. Sebelius

Our cases establish a clear line between a tax and a penalty: “‘[A] tax is an enforced contribution to provide for the support of government; a penalty . . . is an exaction imposed by statute as punishment for an unlawful act.’” United States v.  Reorganized CF&I Fabricators of Utah, Inc., 518 U. S. 213, 224 (1996 (quoting United States v. La Franca, 282 U. S. 568, 572 (1931)).  In a few cases, this Court has held that a “tax” imposed upon private conduct was so onerous as to be in effect a penalty.  But we have never heldnever—that a penalty imposed for violation of the law was so trivial as to be in effect a tax.  We have never held that  any exaction imposed for violation of the law is an exercise of Congress’ taxing power—even when the statute calls it a tax, much less when (as here) the statute repeatedly calls it a penalty. When an act “adopt[s] the criteria of wrongdoing” and then imposes a monetary penalty as the “principal consequence on those who transgress its standard,” it creates a regulatory penalty, not a tax.   Child Labor Tax Case, 259 U. S. 20, 38 (1922).



So the question is, quite simply, whether the exaction here is imposed for violation  of the law.  It unquestionably is.

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