In February the Clinton Administration proposed 16 tax law changes, including stiffer penalties for shelter-users and excise taxes on promoters' fees.

FORBES: Stormy weather for tax shelters

"There is no possibility of repeal of the estate tax with Congress so divided, " says Ronald Pearlman, a former Reagan Administration Treasury official and now head of the graduate tax law program at Georgetown University Law Center.

FORBES: Where's My Tax Cut?

Judge Hudson also shot back at the administration's argument that federal taxation powers give it the right to levy the penalty on those who forgo insurance, noting that the administration had avoided using the unpopular word "tax" during the law's debate only to employ it later for legal reasons.

WSJ: Judge Sides With Virginia on Health Law

Tax reforms based on lowering tax rates and closing loopholes go back to the Reagan administration, when Democrats served as the congressional co-sponsors of the landmark 1986 tax reform law.

WSJ: Paul Ryan: The GOP Budget and America's Future