Cato is on a big media push to recycle an older attack on ObamaCare. Adler & Cannon claim that IRC 36B doesn’t permit federal tax credits for coverage in the federal exchanges (as opposed to exchanges created by states).
Today, let’s look at the procedural tax issues. Taxpayers don’t generally have standing to challenge a tax or credit imposed on others. Adler & Cannon agree (page 64), but predict a large employer in a federal exchange state will fail to cover their employees, and one of them will be assessed a penalty for violating the employer mandate, giving them standing.
That seems an interesting way to gain standing, as far as it goes. But note the problems:
- This lawsuit cannot be filed until some employer pays the mandate penalty in a federal exchange state – spring 2015 at the earliest.
- This lawsuit doesn’t challenge 36B tax credits in federal exchange states, but only the employer mandate penalty in a federal exchange state. So if they win (say, in June 2017), the employer mandate is damaged, but not the federal exchange tax subsidies.
- This lawsuit really has nothing to do with the recent SCOTUS decision.
- Unlike the individual mandate, no one thinks the employer mandate is unconstitutional. Large employers subject to the mandate are without a doubt engaged in interstate commerce.