Congress's taxing power provides an independent ground to uphold the minimum coverage provision. In "passing on the constitutionality of a tax law," a court is "concerned only with its practical operation, not its defi- nition or the precise form of descriptive words which may be applied to it." Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 363 (1941) (citation omitted). The practical operation of the minimum coverage provision is as a tax law. The only consequences of a failure to maintain min- imum coverage are tax consequences: non-exempted federal income taxpayers will have increased tax liability for those months in which they fail to maintain minimum coverage for themselves or their dependents. That additional tax liability will be calculated on the basis of the taxpayer's household income (subject to a floor and a cap), reported on the taxpayer's federal income tax return, and collected by the IRS.

The fact that the minimum coverage provision--like longstanding tax provisions such as the exclusion of employer-paid health insurance premiums from employees' taxable income--is intended to encourage health insurance coverage has no bearing on the taxing power inquiry. It is well settled that a tax "does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed." United States v. Sanchez, 340 U.S. 42, 44 (1950).

Likewise, that Congress used the word "penalty" in the minimum coverage provision, 26 U.S.C.A. 5000A(b), rather than "tax," is immaterial to whether it was a proper exercise of Congress's power over taxation. So too is the fact that Section 5000A includes the predicate for the penalty in a different subsection than those governing the penalty's calculation, assessment, and collection.