NEW YORK (
TheStreet) -- It appears Obamacare is not a tax.
The U.S. Supreme Court heard the first round of three days of oral arguments Monday about whether the Patient Protection and Affordable Care Act is actually a tax, including the case made by Robert Long, an outside lawyer asked by the justices to argue in favor of viewing the legislation as a tax.
"The Anti-Injunction Act imposes a 'pay first, litigate later' rule that is central to Federal tax assessment and collection," Long said in his opening statement. "Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes."
Simply, Long argued that Obamacare qualified as a tax because all Americans would be required to report their health insurance on tax returns to start in 2014, and a penalty would be levied for those who did not report. This fine, Long reasoned, was a type of tax.
The argument came from a Fourth Circuit Court of Appeals ruling,
that the penalty was a tax because only a taxpayer who filed on a federal tax return collected by the IRS would be subjected to it.
The Obama administration initially fought the tax point of view, but abandoned it after a Virginia federal court rejected it, according to
The justices, however, were not entirely convinced of this logic.
"Now, here, Congress has nowhere used the word 'tax.' What it says is penalty," Justice Stephen Breyer said. "And I know you point to certain sentences that talk about taxes within the Code -- and this is not attached to a tax. It is attached to a health care requirement."
If the Court did find Obamacare to qualify as a tax, hearings of the legislation would likely have to wait until after the "tax" had been put into practice in order to determine if the mandate, or law,
had harmed anyone
Justice Ruth Bader Ginsburg said to Long that the Tax Injunction Act, modeled on the Anti-Injunction Act, would not apply to penalties created to induce compliance with a law, instead of serving the purpose to raise revenues.
"And this is not a revenue-raising measure because, if it's successful, they -- nobody will pay the penalty, and there will be no revenue to raise," said Ginsburg.