NFIB Sebelius Dissent



““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 pen-
alty, not a tax.  Child Labor Tax Case, 259 U. S. 20, 38

 So the question is, quite simply, whether the exaction
here is imposed for violation of the law.  It unquestion-
ably is.  The minimum-coverage provision is found in 26
U. S. C. §5000A, entitled “”Requirement to maintain mini-
mum essential coverage.”” (Emphasis added.)  It commands
that every ““applicable individual shall . . . ensure that the
individual . . . is covered under minimum essential cover-
age.”” Ibid. (emphasis added).  And the immediately fol-
lowing provision states that, “”[i]f . . . an applicable
individual . . . fails to meet the  requirement of subsection
(a) . . . there is hereby imposed . . . a penalty.”” §5000A(b)
(emphasis added).  And several of Congress’’ legislative
““findings”” with regard to §5000A confirm that it sets forth
a legal requirement and constitutes the assertion of regu-
latory power, not mere taxing power.  See 42 U. S. C.
§18091(2)(A) (“”The requirement regulates activity . . .””);
§18091(2)(C) (“”The requirement . . . will add millions of
new consumers to the health insurance market . . .””);
§18091(2)(D) (“”The requirement achieves near-universal
coverage””); §18091(2)(H) (“”The requirement is an essential
part of this larger regulation of economic activity, and the
absence of the requirement would undercut Federal regu-
lation of the health insurance market””); §18091(3) (“”[T]he
Supreme Court of the United States ruled that insurance
is interstate commerce subject to Federal regulation””).

 The Government and those who support its view on the
tax point rely on New York v. United States, 505 U. S. 144,
to justify reading “”shall”” to mean “”may.”” The “”shall”” in
that case was contained in an introductory provision-—a
recital that provided for no legal consequences—-which
said that “”[e]ach State shall be responsible for providing


. . . for the disposal of . . . low-level radioactive waste.””  42
U. S. C. §2021c(a)(1)(A).  The Court did not hold that
““shall”” could be construed to mean “”may,”” but rather that
this preliminary provision could not impose upon the oper-
ative provisions of the Act a mandate that they did not
contain: “”We . . . decline petitioners’’ invitation to con-
strue §2021c(a)(1)(A), alone and in isolation, as a com-
mand to the States independent of the remainder of the
Act.””     New York, 505 U. S., at 170.  Our opinion then
proceeded to “”consider each [of the three operative provi-
sions] in turn.””  Ibid. Here the mandate-—the “”shall”-”—is
contained not in an inoperative preliminary recital, but in
the dispositive operative provision itself.  New York pro-
vides no support for reading it to be permissive.

  Quite separately, the fact that Congress (in its own
words) “”imposed . . . a penalty,”” 26 U. S. C. §5000A(b)(1),
for failure to buy insurance is alone sufficient to render
that failure unlawful. It is one of the canons of interpreta –
tion that a statute that penalizes an act makes it unlaw-
ful: “”[W]here the statute inflicts a penalty for doing an act,
although the act itself is not expressly prohibited, yet to do
the act is unlawful, because it cannot be supposed that the
Legislature intended that a penalty should be inflicted for
a lawful act.”” Powhatan Steamboat Co. v. Appomattox R.
Co., 24 How. 247, 252 (1861).  Or in the words of Chancel-
lor Kent: “”If a statute inflicts a penalty for doing an act,
the penalty implies a prohibition, and the thing is unlaw-
ful, though there be no prohibitory words in the statute.””
1 J. Kent, Commentaries on American Law 436 (1826).

 We never have classified as a tax an exaction imposed
for violation of the law, and so too, we never have classi-
fied as a tax an exaction described in the legislation itself
as a penalty. To be sure, we have sometimes treated as a
tax a statutory exaction (imposed for something other
than a violation of law) which bore an agnostic label that
does not entail the significant constitutional consequences

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