As the [latest] Obamacare "deadline" approaches...

Some Enlightened Observations About The PPACA

by CtC Warrior Barry Sullivan

There has been a great deal of controversy about the Patient Protection and Affordable Care Act (PPACA), often referred to as “Obamacare”.

Accusations fly that government officials, including the president and Nancy Pelosi, have illegally granted “waivers” to select organizations, such as their favored supporters, contributors, and dining establishments. Supreme Court chief justice Roberts has been called a traitor to the Constitution for finding that the “Individual Mandate” is not unconstitutional.

Although the federal government does exhibit disregard for the law in many cases and on many levels, not all the issues involved in the PPACA controversies are quite that simple. Most, if not all, of the “waivers” granted were granted to concerns that were not subject to the law to begin with, and the issues the Supreme Court had to consider were not as straight forward as many think. (By the way, the Court did strike down the act’s claim to justification under the commerce clause, which is a good thing. The existing precedent is despicable enough.)

For starters, “The Patient Protection and Affordable Care Act” is an amendment to 42 U.S.C. “The Public Health and Welfare” act. It is part of 42 U.S.C.

Buried deep at the bottom of 42 U.S.C., under “Miscellaneous Provisions”, where the truth is often hidden because nobody ever looks there, is this little tidbit: 

42 USC § 18115 - Freedom not to participate in Federal health insurance programs

“No individual, company, business, nonprofit entity, or health insurance issuer offering group or individual health insurance coverage shall be required to participate in any Federal health insurance program created under this Act (or any amendments made by this Act), or in any Federal health insurance program expanded by this Act (or any such amendments), and there shall be no penalty or fine imposed upon any such issuer for choosing not to participate in such programs.”

Hard as it might be to believe, this means exactly what it says, In fact, if this clause were not there, the entire PPACA would be unconstitutional. The federal government can only impose regulations upon federal entities and federally connected activities, where they have legal jurisdiction. Private insurance contracts and, for that matter, private doctor-patient relationships are not within their scope.

But what about the “Individual Mandate”?

The Individual Mandate is not actually part of the PPACA, nor is it part of 42 U.S.C.

Section 1501 of the PPACA merely directs that the Individual Mandate be added to 26 U.S.C as Section 5000A. The Individual Mandate is actually part of the Internal Revenue Code, and subject to all the Title-wide definitions in 26 U.S.C.

Let’s look at the first part of the “Mandate”:

26 USC § 5000A - Requirement to maintain minimum essential coverage

(a) Requirement to maintain minimum essential coverage

An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.

 

(b) Shared responsibility payment

(1) In general

If a taxpayer who is an applicable individual, or an applicable individual for whom the taxpayer is liable under paragraph (3), fails to meet the requirement of subsection (a) for 1 or more months, then, except as provided in subsection (e), there is hereby imposed on the taxpayer a penalty with respect to such failures in the amount determined under subsection (c).

***

In considering whether a law is constitutional or unconstitutional, or for that matter, whether to hear a case or not, the Supreme Court always considers the standing of the petitioner. The petitioner must show, among other things, that he/she/it suffers harm by the contested law. If a law requires an action but imposes no penalty for non-compliance, it is typically regarded that there is no cause for suit. No harm, no foul. No consequence for non-compliance or violation, not unconstitutional due to meaninglessness.

Note my added emphasis above on the term “taxpayer”. This is critically important. Note that the requiring clause (a) does not contain it, but the penalty clause (b) does. It serves to differentiate those who are subject to the penalty tax assessment and those who are not. It must be there or the law is unconstitutional. For taxpayers, there is a consequence. For non taxpayers, there is not.

To understand the significance of this, we must completely forget everything our parents, our teachers, our T.V. shows, our movies, our politicians, our lawyers, our accountants, the IRS, and even “conservative” talk show hosts told us about the federal income tax.

Without going into a long history of the misunderstandings of the 16th Amendment, we only have to look at what Judge Roberts, writing for the majority, said in NATIONAL FEDERATION OF INDEPENDENT BUSINESS ET AL. v. SEBELIUS, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL., otherwise known as “the Obamacare Decision”, to see that the myth that the 16th Amendment allows Congress to levy direct taxes without apportionment, is untrue, if not an outright and deliberate lie.

This dangerous and destructive misinformation is even now promoted in high school textbooks. (Click here for more information on this.)

But the Supreme Court obviously understands the truth:

“c) Even if the mandate may reasonably be characterized as a tax, it must still comply with the Direct Tax Clause, which provides: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” Art. I, §9, cl. 4. A tax on going without health insurance is not like a capitation or other direct tax under this Court’s precedents. It there­fore need not be apportioned so that each State pays in proportion to its population.”

What Chief Justice Roberts is saying here is that the Individual Mandate is not unconstitutional as long as the penalty only applies to “taxpayers”.

This is because he understands what a “taxpayer” really is:

By Title 26 definitions, a “taxpayer” is anyone who is subject to the federal income tax. Because the income tax is not a direct tax, it is an excise tax. As clarified by the Supreme Court on several occasions, the federal income tax is an excise assessed on gains derived from the exercise of federal privilege. Private earnings are not included. For an in depth explanation of this subject click here.

Of course, it is not the Court’s job to explain all of this to us. Nor is it mine. I just do it for fun and because I think it’s important.

Regardless of how many people have been conned, cajoled, or coerced into believing that the 16th amendment gave the federal government the authority to tax their private, non-federally connected earnings, the fact remains that it did not. No matter how many private companies and non-federal corporations, regardless of their size, who choose, for whatever reasons, to withhold federal taxes from their worker’s paychecks does not mean their workers meet the custom definition of “employee” in the tax code which allows the code to not violate the Tax Clause in the Constitution when it requires withholding from “employees”.

Consequently, anyone who actually has no federally privileged “income” and knows how to properly rebut incorrect allegations made about them in the form of  W-2s,  1099s and 1099-Rs, is not affected by the Individual Mandate “penalty” at all, because the “penalty” is an assessment on their “income”, which is zero. Hence, the Court found the Mandate not unconstitutional with the term “taxpayer” included in subsection (b).

Keep in mind that we are talking about zero “gross income” not “net income”. Net income is the remainder after allowable deductions have been subtracted from the gross, and receipt of taxable income makes one subject to the income tax, and thereby a “taxpayer” under Title 26 definitions, regardless of whether it results in an amount of tax due.

It would appear that the convoluted lesser than/greater than wording of subsection (c) Amount of Penalty that a zero income on which to assess the penalty might still subject someone to the Flat Dollar Amount described in (c)(2)(A). But keep in mind that the penalty described in subsection (b) only applies to taxpayers in the first place. If there is no subject income to begin with, nothing which follows in the penalty calculations applies.

In addition, also in USC 26 Section 5000A, is this: 

(g) Administration and procedure

(2) Special rules

Notwithstanding any other provision of law—

(A) Waiver of criminal penalties

In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.

 

(B) Limitations on liens and levies

The Secretary shall not—

(i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or

 

(ii) levy on any such property with respect to such failure.”

According to this subsection, there can be no penalty or collection procedures imposed for not paying the penalty assessment, even if there is one. Again, “no harm/no foul” applies. Undoubtedly the IRS will attempt to obviate the law by trying to retain withholdings remitted to them by third parties on behalf of CtC-educated filers seeking the return of their property. It will be important to hold fast to the fact that such withholdings were made in error, withheld from non-subject earnings, they do not constitute a payment for anything, and that seizure of them by whatever calculation under (c) Amount of Penalty constitutes an illegal levy.

Of course, it is always preferable to avoid incorrect withholding to begin with. The more employers (in the common sense of the word) understand the realities of the tax code, the better off we all will be. The “Employer Mandate” is also part of USC 26, and the same kind of custom-definition based mumbo-jumbo deceptions are at work as they are with respect to everyone else throughout the code. (See “The Law Means What it Says”).

Almost every organization we rely on for our lifestyles unnecessarily subject themselves to the federal tax laws. This includes our grocers, car makers, insurers, landlords, farmers, lumber suppliers, our clients and customers, and many others.

It is one thing to extricate oneself from unconstitutional taxation and regulation, but even if we do, we are still affected by the "ignorance tax" when it affects our suppliers and customers. In addition to increasing costs, sucking money out of the productive economy, discouraging productive individuals, and encouraging parasitic looters, many of the most oppressive federal regulations are supported by laws (PPACA is only one) which find a way to refer their definitions back to USC 26, where all is not what it seems.

Other federal laws, appearing in other titles, use the same kind of convolutions, where the law appears to apply to everyone, but really applies only to federal, federally owned and federally privileged entities. I have even found an environmental regulation that does not apply to anyone!

Education is everything. Real education, that is.