While upholding the health care reform package today, the U.S. Supreme Court distanced itself from the thinking of most of the lower courts that had ruled on challenges to the law. Many of the legal arguments had focused on the question of whether the individual mandate provision was a regulation of commerce or a tax, and the consensus was that it fell under the regulation of commerce. The Supreme Court rejected that line of thinking, ruling that the provision went beyond Congress’s commerce authority. Therefore, to the Supreme Court, the individual mandate must be a tax.
This is exactly what the individual mandate is in economic terms anyway. Any money that a citizen is generally compelled to pay is a tax. This is true regardless of the purpose of the law in question or the nature of the benefits that result. It is still a tax regardless of who the money is paid to.
Viewed as a tax, of course, the individual mandate is certain to be unpopular. Its burden falls disproportionately on students, unemployed workers, disabled people, and poor people. It is hard enough to be a college student these days, as you can see from the enormous burden of student debt, and the individual mandate makes it that much harder.
There is another problem with the individual mandate when viewed as a tax. It will be almost impossible to collect. The people who owe this money to the government are, in general, people who have no money to begin with. It almost like creating a special real estate tax for homeless people on the theory that homelessness is a sneaky form of tax evasion. It cannot add much to the government coffers, but it adds tremendously to the political friction of society. There has to be a better answer.