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Court decision calling penalty a tax sets off debate

WASHINGTON — Is it a tax? Can it be called a penalty, maybe a fee or a fine? How about a penalty tax?

Following the high-stakes Supreme Court ruling that narrowly upheld President Obama’s health care law, a debate erupted Friday as lawmakers sought to brand the law and how Americans think of it.

The debate is infused with an ample amount of politics, a dollop of legalese, and plenty of spin. “Don’t believe the hype that the other side is selling,” Governor Deval Patrick said Friday morning on a conference call organized by Obama’s campaign.

“I just want to respond to the, frankly, bizarre attack, which is the claim this act represents a big tax increase on the middle class,” Patrick said. “First, this is a penalty. It’s about dealing with the freeloaders — the folks who now get their care without insurance in high-cost emergency room setting. And all the rest of us pay for it today.”

The decision, written by Chief Justice John Roberts, upheld the law on the grounds that Congress can impose a mandate for people to buy insurance as a form of its taxing powers. Under the law, those who fail to obtain insurance will be required to pay a tax penalty starting in 2014.


In legal terms, the ruling sought to be clear: The Constitution allows Congress to assess taxes, the law included taxes, therefore the law is constitutional. Politically, the definitions were not so clear.

“Obamacare is now a tax imposed on all Americans,” Texas Attorney General Greg Abbott, a Republican, said on MSNBC.

“They’re retreating to the last bastion of scoundrels, which is to try to cast this as some sort of tax increase,” Maryland Governor Martin O’Malley, a Democrat, said on a conference call. “It’s a penalty.”

Making the case that it is a tax allows Republicans to portray their Democratic rivals as tax-and-spend liberals and Obama as a deceiver in chief.


“They knew it would have never passed if they said it was a tax,” Senate minority leader Mitch McConnell said just after the health care ruling. “The Supreme Court has spoken. This law is a tax. This bill was sold to the American people on a deception.”

But some on Friday compared the “tax” charge with the “death panel” distortions from three years ago. The law does not affect the vast majority of Americans, Democrats pointed out, because most people already have health insurance and would be exempt from paying. The law also provides assistance to those who cannot afford health insurance.

“You can call it what you want,” White House press secretary Jay Carney told reporters on Air Force One. “If you read the opinion, it is not a broad-based tax. It affects 1 percent, by [Congressional Budget Office] estimates, of the population. It is not something that you assess like an income tax.”

But by making the tax component a crux of their argument, Republicans could face challenges. Romney signed into law a nearly identical setup in his health care plan in Massachusetts. That law also included an individual mandate and a penalty on those who did not obtain health insurance. Romney has often said that he never raised taxes in Massachusetts, although there are several instances where he referred to the health care penalty as a “tax.”


In a 2009 op-ed in USA Today, Romney wrote, “Using tax penalties, as we did, or tax credits, as others have proposed, encourages ‘free riders’ to take responsibility for themselves rather than pass their medical costs on to others.”

Jonathan Gruber, an architect of the Massachusetts and the federal laws, said the assessment should not be considered a tax. Instead, people have a choice of whether they want to pay for insurance or to pay the government. In Massachusetts, less than 1 percent of state residents pay the state, he said.

“It’s not a tax on the middle class,” Gruber said. “It’s a choice they’re making that they would rather stay out of the medical care system and pay the costs of their doing so.”

Matt Viser can be reached at maviser@globe.com.