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Tuesday, August 18, 2009

Health Care Tax Insanity Chronicles, Part 3 (IRS To Decide Amount of Taxation)

There is so much wrong with the House and Senate draft health care restructuring bills, that it is almost hard to know where to begin. I have already pointed out the new role of the Internal Revenue Service as enforcer of health care mandates, and the unprecedented taxation of people who do nothing. Here is Part 3 in the Health Care Tax Insanity Chronicles:

In the draft House bill, there is a 2.5% tax on the income (using a convoluted formula) of people who do not have acceptable coverage. In the draft Senate HELP Committee bill, however, the amount of taxation is not set.

Rather, the Senate gives the Secretary of the Treasury (who is in charge of the IRS) the power to come up with whatever amount of taxation (euphemistically called a "shared responsibility payment") he or she deems necessary to achieve compliance with the health care mandate. The bill provides for a new section 59B of the Internal Revenue Code (starting at page 103 of the bill; emphasis mine):



(1) IN GENERAL.—In the case of any individual who did not have in effect qualifying coverage (as defined in section 3116 of the Public Health Service Act) for any month during the taxable year, there is hereby imposed for the taxable year, in addition to any other amount imposed by this subtitle, an amount equal to the amount established under paragraph (2).


(A) REQUIREMENT TO ESTABLISH.—Not later than June 30 of each calendar year, the Secretary [of the Treasury], in consultation with the Secretary of Health and Human Services and with the States, shall establish an amount for purposes of paragraph (1).

(B) EFFECTIVE DATE.—The amount established under subparagraph (A) shall be effective with respect to the taxable year following the date on which the amount under subparagraph (A) is established.

(C) REQUIRED CONSIDERATION.—In establishing the amount under subparagraph (A), the Secretary shall seek to establish the minimum practicable amount that can accomplish the goal of enhancing participation in qualifying coverage (as so defined).

Under this wording, the Secretary of the Treasury, i.e., the IRS, is the decision-maker with regard to the amount of the tax. The Secretary only need consult with the Secretary of Health and Human Services and the States.

The truly pernicious aspect of this provision is not that the Secretary of Treasury would pick some arbititrarily high amount just to raise revenue. Depending upon the nature of permitted judicial review, such an arbitrary decision likely would be overturned.

Rather, the very nature of the tax is unrelated to the cost of coverage. It is a tax to compel compliance. So the more people resist coverage, the more discretion the IRS would have to raise taxes to achieve compliance.

This is taxation unrelated to the federal budget needs or any rational cost of providing a federal government service. It is unprecedented taxation as law enforcement tool, and a complete abdication of Congressional accountability and responsibility.

Related Posts:
IRS The New Health Care Enforcer
Taxing Your Mere Existence

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  1. So the big question is: how do you get this message to the average voter so this entire Obamacare monstrosity can be put down once and for all?

  2. dude, what a load of crap. I understand that health insurance is good to have and all, and don't take this the wrong way, but its just another restriction being placed on us, another little bit of freedom out the window.

  3. Back when Kennedy et al jammed the baby boomers from building up their IRA's -- remember not having limits? -- it was clear that the Democratic elites were planning on getting that money. They went for the short term solution then. Which was to force savers to spend.

    Now they're coming back for those retirees' IRA/401k bundles of Debtocrap joy. Wonder how many grasshoppers will get a free ride on the worker ants now?

  4. One thing that really troubles me about the health care reform bill is the section that defines what "acceptable coverage" is. Right now I have catastrophic health insurance. The coverage is very high, $5 million, and the deductable is very high, $20,000, and routine office visits and routine procedures are not covered. I have a savings account that I keep $20,000 in to pay my out of pocket expenses.

    This works very well for me because I don't go to the doctor very much. If I do have to go to the doctor I shop around for things I know I will need to pay for. Example, a doctor needed me to get some blood work, the lab she sent me to wanted $400, I found a lab to do the same work for $80. Another example, I found a small clinic in my town that has very good prices for basic procedures, I go to them for most things.

    Now, the health care reform bill, in the section which defines what is "acceptable coverage" would make my catastrophic health insurance illegal. That's right, they will force me to buy the kind of expensive "cover everything including routine office visits" insurance that I neither need nor want. My health insurance costs about $100 a month. The "cover everything and anything" insurance costs about $500 a month. I cannot afford such insurance, nor do I want it, nor do I need it.

    What I don't understand is how forcing me to buy insurance that I neither want nor need is going to help reduce costs of healthcare overall? I already only go the doctor when absolutely necessary. I already shop for deals on everything I need. This added burden of paying for insurance I don't want will not save any money at all. I see this as a tax, plain and simple.

  5. Solutions and discussions at http://realnh.org