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Health Insurance Challenge

Health Insurance Challenge

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Published by Katie Watson

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Published by: Katie Watson on Sep 13, 2012
Copyright:Attribution Non-commercial

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09/13/2012

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Electronic copy available at: http://ssrn.com/abstract=2106789
 
 
CASE WESTERN RESERVE UNIVERSITY
TAXATION WITHOUT REPRESENTATION:
 
THE ILLEGAL IRS RULE TO EXPAND TAXCREDITS UNDER THE PPACA
 Jonathan H. Adler Michael F. Cannon
 Forthcoming in
H
EALTH
-M
ATRIX
:
 
T
HE
J
OURNAL OF
L
AW
-M
EDICINE
 
Case Research Paper Series in Legal Studies
Working Paper 2012-27July, 2012 (revised, Sept., 2012)
This paper can be downloaded without charge from theSocial Science Research Network Electronic Paper Collection:Available at SSRN:http://ssrn.com/abstract=2106789For a complete listing of this series:http://www.law.case.edu/ssrn
 
Electronic copy available at: http://ssrn.com/abstract=2106789
DRAFT 
 – 
No 
 
f  
or Ci 
ion 
 September 5, 2012
TAXATION WITHOUT REPRESENTATION:Th
e
Ill
e
gal IRS Rul
e
to Expand Tax Cr
e
dit
s
und
e
r th
e
PPACA
Jonathan H. Adler Case Western Reserve University School of LawMichael F. CannonCato Institute
For 
ing in 
H
EALTH
M
ATRIX
:
 
J
OURNAL OF
L
AW
-M
EDICINE
Ab
s
tra
c
t
 The Patient Protection and Affordable Care Act (PPACA) provides tax creditsand subsidies for the purchase of qualifying health insurance plans on state-runinsurance 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 healthinsurance in federal exchanges created in states without exchanges of their own.This rule lacks statutory authority. The text, structure, and history of the Act showthat tax credits and subsidies are not available in federally run exchanges. TheIRS rule is contrary to congressional intent and cannot be justified on other legalgrounds. Because the granting of tax credits can trigger the imposition of fines onmillions of individuals and employers, the IRS rule is likely to be challenged incourt.
 
Electronic copy available at: http://ssrn.com/abstract=2106789
DRAFT 
 – 
No 
 
f  
or Ci 
ion 
 September 5, 2012
TAXATION WITHOUT REPRESENTATION:Th
e
Ill
e
gal IRS Rul
e
to Expand Tax Cr
e
dit
s
und
e
r th
e
PPACA
Jonathan H. Adler 
*
and Michael F. Cannon
**
 
Cont
e
nt
s
 
*
Johan Verheij Memorial Professor of Law and Director of the Center for Business Law & Regulation, CaseWestern Reserve University School of Law.
**
Director of Health Policy Studies, Cato Institute.The authors would like to thank James Blumstein, Meinan Goto, Erik Jensen, Timothy Jost, Alec MacGillis, EricRasmuusen, Mark Scarberry, Richard Urich, and Steven J. Willis for comments on drafts of this article and thearguments therein, and Nathaniel Dreyfuss, Meinan Goto, Pragya Kakani, and Karin Miller for their researchassistance. The authors are responsible for any errors, omissions, or inanities that remain.

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