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).
Yesterday I gave an overview. See also CBPP who disagrees with Cato (h/t to Tim Jost)
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.
@koutterson
