No, it's really not my money.

The Federal Government is paying me $1,200 this year to buy a house. Seriously! They took the money I paid in 2011 in home mortgage interest and property taxes, multiplied it by my tax rate, and decided to pay me $1,200. Gee, thanks, Uncle Sam!

What's that you say? They didn't pay me anything, they just reduced my taxes? I don't understand. If they're not paying me, why are they sending me a check in May? What? That was already my money and they were just borrowing it? Then why didn't I have it to begin with?

The point, of course, is that the whole idea that some amount of my paycheck is "my money" and some amount is "the government's" money is absurd. I'm not saying that's there's no such thing as private property or that people aren't entitled to earn money for their labor. I'm saying that, every April 15, the IRS performs a wacky calculation and decides how much it costs me for the privilege of living in America.


And let's not kid ourselves. The tax code is full of social engineering. This year, the federal government decided to pay me $1,200 for buying a house and another $200 for putting energy-efficient windows in it.  The IRS looks at my life every year, looks at the choices I've made, and decides how much I should pay into the general pot. Then it cuts me a check for my overpayments or makes me cut a check for my underpayments.

Which, of course, brings us to the ACA's mandatory coverage provision. Everyone's been talking about whether it falls under the Commerce power, but most people ignore that argument that it falls under the Taxing power. Of course it's a tax. It's as much a tax as the government's tax on my decision not to buy a hybrid car. The fact that TurboTax would perform an addition function rather than a subtraction function when calculating my refund is totally irrelevant. It's just another one of the thousands of things that TurboTax would take into a count when calculating my maximum refund.

The sentiment that the mandatory coverage provision is not a tax is a prime example of the "it's my money" fallacy. It's not my money. The government decides which of my behaviors has positive externalities and which have negative externalities, and it calculates my tax burden accordingly.

Oddly enough, however, Supreme Court precedent disagrees with me. Consider the bizarre history of federal child labor laws. In 1916, Congress passed a law banning the interstate sale of goods made by child labor. The Supreme Court struck it down in 1918 in Hammer v. Dagenhart, ruling that it was an impermissible intrusion on intrastate working conditions. Congress responded, enacting a special tax on the interstate sale of all goods made by child labor. The Supreme Court stepped in again, in Bailey v. Drexel Furniture, saying that the tax was not a tax but a penalty, and that it was invalid for the same reasons set forth in Hammer. Now, the Supreme Court has never overturned Bailey. The reason, of course, is that since 1937, the Supreme Court has never considered the question, because it has not since invalidated a true regulation of interstate commerce.

Nonetheless, the idea that there is some difference between a "tax" and a "penalty" when both are administered through the Internal Revenue Code and are line items on your 1040 is archaic and should be rejected. I haven not yet heard anyone argue that it would be unconstitutional for Congress to raise everyone's taxes by a small amount and then give a tax credit for having health insurance. Yet, in the modern world, that would be the functional equivalent of the individual "mandate." And, beyond that, I'm willing to say that, in the age of TurboTax, it's the actual equivalent. The only difference is that with the modern Republican party, a general tax increase is completely off the table.

Based on last week's oral arguments, the Supreme Court barely gave the tax argument the time of day. If the mandatory coverage provision falls under the Commerce Clause, the Taxing Clause will not save it. And all because a majority of the Supreme Court has committed the same fallacy that led George W. Bush to two country-bankrupting tax cuts. They all seem to think that, until April 15, every penny I earned in the previous year is "my money." No, it's really not, and it never was.