Supreme Court’s Obamacare Decision: Taxation and the Power to Destroy

Green Mountain Patriots

In a 1976 article for the Freeman entitled “The Power to Tax is the Power to Destroy,” Dr. Clarence Carson quotes from an opinion put forward by Chief Justice John Marshall in the 1819 case McCulloch v. Maryland. “That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create ….” Of course the question in this case was an attempt by the state of Maryland to tax a federal bank. Chief Justice Marshal was applying the stated general principle of taxation to the relationship between political entities. Dr. Carson simply broadened the application to include the relationship between a political entity and private citizens. The theme of equating taxation with the power to destroy was taken up by Charles Adams, who is a certified specialist in taxation law, in his book “For Good and Evil: The Impact of Taxes on the Course of Civilizations.” The book reaches a well researched conclusion that policies of a light tax burden have long accompanied the rise of civilizations, while excessive tax burdens have been a big factor in the fall of civilizations.

The Supreme Court’s decision to uphold Obamacare on the basis that it constitutes a form of taxation makes this observation particularly relevant. This is in addition to the fact that the ruling is arguably quite an overreach. The Obama Administration had originally argued their case on the basis of applying the Commerce Clause. When it became clear during questions from the Justices that such an argument would not pass constitutional muster, the Department of Justice asserted just last week that the right to impose the mandate was based on the Congress’ ability to levy taxes. This was quite an about face as it was not the basis of the formal argument when the case was presented and the Obama Administration had always insisted that Obamacare was not a tax increase. Going back to his campaign in 2008, he insisted that no one earning less than $250,000 a year would pay higher taxes. That was then and this is now. The fact that a majority of Supreme Court justices went along went this “bait and switch” approach to changing the defense reasoning on the fly, should be a matter of concern to all those who take our system of checks and balances seriously. It comes off as if a majority of Justices were just looking for an excuse to accommodate the Administration even though the formal defense argument clearly did not pass constitutional muster.

Now we are left with a situation where a Supreme Court precedent has been set for the federal government to be able to tax its citizens for almost any reason. What other behaviors will meddling politicians seek to tax in order to ensure that the behavior of its citizens line up with what those politicians deem to be the in the interest of the public good? It took a constitutional amendment to even levy an income tax because our founders opposed, not only excessive taxation, but direct taxation. These concerns were summed up in the following quote by Thomas Jefferson: “…a wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”

How far we have traveled from the sensible view that taxes should be minimal and indirect. We now are moving in the direction of a post-constitutional period where limits on what the political class can tax to support their social engineering schemes have been eliminated. Such actions make the stakes in the coming election higher than ever as tax tyranny is headed our way fast.