Abstract

http://ssrn.com/abstract=2106789
 


 



Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA


Jonathan H. Adler


Case Western Reserve University School of Law; PERC - Property and Environment Research Center

Michael F. Cannon


Cato Institute

July 16, 2012

Health Matrix: Journal of Law-Medicine, Forthcoming
Case Legal Studies Research Paper No. 2012-27

Abstract:     
The Patient Protection and Affordable Care Act (PPACA) provides tax credits and subsidies for the purchase of qualifying health insurance plans on state-run insurance exchanges. Contrary to expectations, many states are refusing or otherwise failing to create such exchanges. An Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds. Because the granting of tax credits can trigger the imposition of fines on millions of individuals and employers, the IRS rule is likely to be challenged in court.

Number of Pages in PDF File: 79

Keywords: health care, health insurance, Affordable Care Act, health insurance exchanges, tax credits, administrative law, Internal Revenue Service

JEL Classification: K32, K34

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Date posted: July 15, 2012 ; Last revised: July 1, 2013

Suggested Citation

Adler, Jonathan H. and Cannon, Michael F., Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA (July 16, 2012). Health Matrix: Journal of Law-Medicine, Forthcoming; Case Legal Studies Research Paper No. 2012-27. Available at SSRN: http://ssrn.com/abstract=2106789

Contact Information

Jonathan H. Adler
Case Western Reserve University School of Law ( email )
11075 East Boulevard
Cleveland, OH 44106-7148
United States
216-368-2535 (Phone)
216-368-2086 (Fax)
HOME PAGE: http://www.jhadler.net
PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

Michael F. Cannon (Contact Author)
Cato Institute ( email )
1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States
202-218-4632 (Phone)
202-842-3490 (Fax)
HOME PAGE: http://www.cato.org/people/cannon.html
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