Constitutional Law I
With the tax clause, the subject is usually assumed either a tax or a penalty.
The proper object of taxing is to raise revenue. The object of the penalty should also be analyzed to determine its object (usually to regulate something). It could still be valid if Congress has the power to regulate the matter.
Congress has the power to regulate activities, but it cannot regulate inactivity. It can tax inactivity however.
It should then actually be determined if the tax is actually a tax or is a penalty. This is done using seven factors from Sebelius:
- payment is made to the U.S. Treasury,
- amount is calculated in much the same way as income tax liability,
- payment provisions are included in the Tax Code,
- payments produce some revenue,
- a payment is less than the cost of insurance,
- the Act specifies no scienter element, and
- the IRS possesses only those enforcement powers that it exercises in other types of tax cases.