THE BIGGEST TAX INCREASE IN U.S. HISTORY?
President Obama has repeatedly asserted that the new health care reform’s individual mandate requiring everyone to have qualified health insurance coverage or pay a penalty is not a tax. And yet the Department of Justice (DOJ) now claims the mandate is a tax, but not because the legislation refers to the mandate as a tax — it doesn’t. Rather, the DOJ lawyers want the Supreme Court to confer its blessings on ObamaCare when the issue comes before the Court, and the lawyers are increasingly concerned that the 20-plus state challenge claiming the mandate is unconstitutional may hold up, says Merrill Matthews, a resident scholar with the Institute for Policy Innovation.
The Democratic defense has morphed from the: “Of course we have the constitutional power to impose an individual mandate” defense to, “The Commerce Clause gives us the power to mandate coverage” defense, and now to their, “It’s a tax” defense.
Many conservatives rejoiced at the flip-flop, proclaiming they have caught the president and his administration in one more broken promise: not to raise taxes on families making less than $250,000 a year. If the mandate really is a tax, it could be the largest in history — and it affects everyone, says Matthews:
- A Kaiser Family Foundation survey of employers last year found that average premiums for an employer-provided family policy, which is more likely to be the type of comprehensive coverage required by ObamaCare, was $13,375, about 25 percent of the median household income of $52,000.
- That $13,375 family policy costs the same for both lower- and higher-income workers; so if the mandate is a tax, it’s equivalent to a 50 percent income tax on a family making $25,000 a year but a 10 percent income tax on a family making $130,000 a year. Talk about regressive taxes!
Of course, the Obama administration will argue that it is addressing the regressivity problem by providing a sliding scale subsidy, up to 400 percent of the federal poverty level (about $88,000 for a family of four in 2010), to insulate lower- and middle-income families. But subsidies don’t negate the fact that ObamaCare imposes the tax on every individual in the country. It simply means that someone else — i.e., either employers or other taxpayers — will be paying the tax for millions of Americans, says Matthews.
Source: Merrill Matthews, “The Biggest Tax Increase in U.S. History?” Forbes, July 26, 2010.
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