Paul L. Caron

Saturday, November 8, 2014

Supreme Court Grants Cert. to Hear Challenge to IRS's Expansion of Affordable Care Act Tax Credit

Supreme Court (2014)The Volokh Conspiracy:  Supreme Court to Hear King v. Burwell Challenge to IRS Tax Credit Rule, by Jonathan H. Adler (Case Western):

Friday the Supreme Court granted certiorari in King v. Burwell, one of four pending challenges to the IRS rule authorizing tax credits and cost-sharing subsidies for the purchase of health insurance in federally established exchanges. ...

With this grant, the Court has the opportunity to reaffirm the principle that the law is what Congress enacts, not what the administration or others wish Congress had enacted with the benefit of hindsight. Granting tax credits to those who need help purchasing health insurance may be a good idea, and may have bipartisan support, but the IRS lacks the authority to authorize such tax credits where Congress failed to do so. The PPACA only authorizes tax credits for the purchase of insurance  on exchanges “established by the State.”

Prior TaxProf Blog coverage:

(Hat Tip: Greg McNeal.)

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Only in America. There is no other democracy on earth which makes major political decisions this way.

Three questions: (1) If the Court rules that residents of the 36 states in question are ineligible for tax subsidies, will it do so prospectively only and, if so, as of what date? (2) Will the Court leave the tax (more conventionally known as the mandate) in place for taxpayers newly ineligible for the credit? And (3) what effect will the ruling have on Mayo and Chevron, since plaintiffs are technically challenging a pro-taxpaper regulatory interpretation of the ACA by the Treasury Department?

The politics of all of this are at least as fascinating as the law. Will Americans thank Republicans for suing to raise taxes on 4.7 million of them? [As a technical matter, that's what the suit, if successful, would do.]

Posted by: Theodore Seto | Nov 9, 2014 10:13:36 AM

The legislation used to raise the tax in the first place is unlawful

Posted by: Taranis | Nov 9, 2014 2:34:32 PM

Did anyone else check Taranis' website? Go ahead, I dare you. Assuming Taranis is serious, he/she believes all manmade legislation is proscribed by Deuteronomy 4:2. On the other hand, Taranis is probably pulling our collective legs . . . I hope.

Posted by: Publius Novus | Nov 10, 2014 8:42:33 AM