Posts Tagged ‘tax’
Health Care News
Not all surprises are good. When it comes to Obamacare, the original projections are turning into unfortunately different realities. For the next 12 days, Heritage is going to highlight one of the various changes in Obamacare projections (i.e. cost, enrollment, etc.) from when the law first passed until now.
One of the most infamous features of Obamacare is the individual mandate, which requires most Americans to purchase health insurance or pay a tax for being uninsured.
In 2010, the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) estimated that 4 million people would pay the penalty in 2016 and that collections from those penalties would be about $4 billion per year between 2017 and 2019.
In 2012, the CBO and JCT updated their estimate of those paying the mandate to 6 million people in 2016, totaling $7 billion in tax revenue and growing to $8 billion per year from 2017-2022.
Yesterday, House Minority Leader Nancy Pelosi (D-CA) almost called Obamacare’s individual mandate a tax, stopping mid-word to call it a “penalty”. White House Chief of Staff Jack Lew and other spokespersons echoed this talking point. This is in spite of last week’s Supreme Court ruling that deemed the mandate unconstitutional under both the Commerce Clause and the Necessary and Proper Clause, but ruled that it could stand as part of Congress’s authority to “lay and collect taxes.”
Dubbing the individual mandate a tax saved the President’s health care law, but it’s a concept that President Obama himself has strongly denied. In a 2009 interview, President Obama argued that his individual mandate was not a tax increase, stating, “I absolutely reject that notion.”
But after last week, President Obama must now admit it’s a tax or admit the mandate is unconstitutional. It’s can only be one or the other.
The mandate is in fact a tax, and it’s just one of many new taxes that hit the middle class in Obamacare. Lo and behold, another broken promise. President Obama claims that the mandate is holding people responsible, keeping with that spirit, here’s a reminder of the other promises the President and his health care law are responsible for breaking:
President Obama repeatedly promised not to raise taxes on middle-class families. Yesterday, the Supreme Court ruled that he already has.
Chief Justice John Roberts upheld the President’s health care law on the grounds that the “individual mandate” is a constitutionally permissible tax increase. This violates Obama’s pledge. Middle-class families will pay the vast majority of these new taxes.
Obamacare imposes a penalty—or tax increase—on Americans who do not purchase health insurance. The Congressional Budget Office estimates that most of those paying these taxes are middle-class individuals and families making less than 500 percent of the federal poverty level: $59,000 for an individual and $120,000 for a family of four. Three million lower-income and middle-class Americans will pay an estimated $2 billion in these “mandate taxes.”
Like you, I am disappointed by the Supreme Court’s Obamacare decision. The Court misread and rewrote Obamacare in order to save it. Such contortions are not the proper role of judging. Most Americans are with you and me and deeply dislike this law.
We believe, however, that this is far, far from a time for despair. This decision will energize freedom-loving Americans to once again take matters into their own hands. Our republic has survived and flourished for more than two centuries because men and women—brave, determined, and deeply committed to the cause of freedom—were willing to stand, to march, and to make whatever sacrifices were necessary so that their children would know the blessings of liberty, the hope and opportunity that flow from living in “the land of the Free.”
They will receive this ruling as a clarion call to action. Once again, the people will have to rise to defend a fundamental American concept: that the power of government over individuals must be limited.
First, let’s acknowledge what was good in the decision. The Court recognized that there are limits to what Congress may do under the Commerce Clause. Big-government forces have for too long abused this clause’s grant of congressional authority, but the Court’s decision reaffirms that there are limits on their actions.
This morning, the Supreme Court didn’t just miss the opportunity to protect individual liberty. It also failed to defend religious freedom. The Court’s ruling to uphold Obamacare doesn’t mean the law has cleared its legal challenges, however. Twenty-three federal lawsuits against Obamacare’s Health and Human Services (HHS) mandate—which goes into effect on August 1—now take on added urgency.
Implementation of the behemoth 2,700-page Obamacare law has only just begun, and the HHS mandate signals the damage to religious liberty and other freedoms Americans will experience as the teeth of the law sink deeply into our society in the coming months and years.
The HHS anti-conscience mandate is a completely separate rule from the individual mandate, and its constitutionality was not considered by the Supreme Court in the cases decided today. The HHS mandate, along with the individual mandate and the rest of Obamacare, still presents a clear threat to individual and religious liberty. Nothing short of full repeal of the statute will adequately protect our freedoms from this federal overreach.
Today’s Supreme Court decision on Obamacare—though it is tragic with regard to statutory interpretation and health care policy—has two significant constitutional silver linings. At the constitutional level, the stakes are much more significant and resistant to political influence. In short, the American people may elect new representatives to repeal Obamacare, but today’s constitutional rulings are far more enduring. And they are, on balance, wonderful.
The Court is inexplicable in reading the mandate penalty as a tax when President Obama and congressional sponsors emphatically denied it was a tax, but that is only a misreading of a statute. On that statutory ruling, the Court majority held that the mandate penalty is not a tax for purposes of the tax Anti-Injunction Act, but is a tax under Congress’s taxing power, despite the fact that the law never calls it a tax. Yes, this is a terribly strained reading of the statute, but conservative constitutional scholars who challenged the mandate never said that Congress did not have the power to enact a tax similar to the mandate penalty.
Despite the Court’s error in reading the individual mandate penalty as a tax, five justices opined that the mandate, standing alone, cannot be justified under the Commerce Clause or the Necessary and Proper Clause. This is not remarkable to anyone who knows the original meaning of the Commerce and Necessary and Proper powers, but it is a serious blow to 90 percent of the legal academics and about 90 percent of Congress, since these have been the clauses used to justify so much of the modern administrative state.
Health Care News
House Speaker Nancy Pelosi and the House Democratic leadership are frantically trying to find enough votes to pass their giant 2,032 page health care legislation this weekend. But before Speaker Pelosi and liberals in Congress pass their big bill, the American taxpayers should be fully aware of the full price tag of this monster.
As Heritage analysts noted earlier in the week, the Congressional Budget Office released its preliminary score of the bill (H.R. 3962) but too many in the media have not been reporting its true cost. The true cost is not the net spending on only the coverage related provisions ($897 billion) but rather the total gross spending for the coverage provisions ($1.05 trillion) as well as any additional spending in the bill (approximately $217 billion). That would raise the plan’s price tag to about $1.5 trillion when including the roughly $210 billion cost of the “doc fix” is included. The “doc fix” refers to the undoing of the flawed Medicare payment update formula, which Congress created but has routinely stopped from being enforced. Under current law, that formula would result in a 20 percent reduction in doctors’ pay under the Medicare program. (more…)
Health Care News
With the President and Congress’s plan to pass comprehensive health care reform reaching increasingly high levels of unpopularity, and reconciliation becoming an impediment, the leadership of the Senate is rumored to be preparing a new secret plan to railroad the bill through the Senate in record time by using a seldom used parliamentary procedure.
Their plan is to proceed to a House passed non-health care bill to provide a shell of legislation to give Obamacare a ride to the House then to the President’s desk. Sound confusing? We lay out the steps below, but essentially the Senate would pass health care reform as an amendment to a completely unrelated bill so the Senate and House could act quickly and without further debate. Even worse? Nobody really knows what that legislation looks like but they plan on voting for it anyway.
Right now, the Senate Finance Committee is in the midst of marking up health care reform “legislation.” Due to Senate procedure, what they are actually marking up is a 200+ page conceptual framework of the actual legislation, not a real bill. That means that not only has no Senator even read the bill but, there is a high probability that the bill hasn’t even been written yet. If the Committee sticks to their artificial deadline of completing work by this Friday then they would have passed a conceptual document reforming the nation’s health care system, spending trillions, without ever seeing an estimated 1,500 pages of legislation, which may or may not be written.
The current plan is to start debate on Obamacare as early as next week under the following four-step scenario: (more…)
The current tax treatment of health insurance is in need of change, but President Obama and Democrats in Congress hesitate to even bring up the issue.
Heritage’s Dr. Stuart Butler outlines current policy:
“Employers receive a tax deduction for contributing to insurance coverage for their employees, as they do for most forms of employee compensation. But health insurance premium contributions are also excludable from the employee’s taxable income, at an estimated cost to the government of $210 billion in 2006.”
As Dr. Robert Helms of the American Enterprise Institute explains, the tax exclusion arose through something of a historical accident:
“During World War II, the War Labor Board…ruled that company-provided fringe benefits…were to be excluded from wartime wage controls. Since companies were unable to raise wages, this gave them an incentive to expand health insurance and pensions as a way to compete for scarce labor. The exclusion of company-sponsored health insurance from taxable income was continued…after the war”
The current tax exclusion is unfair since it “is unavailable to the millions of working families who do not have employer-sponsored insurance, and it disproportionately subsidizes employees in higher tax brackets, who typically also receive more generous coverage,” writes Dr. Butler.
Heritage analysts recently suggested:
“The best way to change the current tax treatment would be to replace the existing tax exclusion with a more equitable and efficient system of individual tax relief, leveling the playing field for robust competition among insurers and creating a level of consumer choice that is routine in every other sector of the American economy.
Short of that, Congress could limit or cap the exclusion, perhaps only for income tax purposes, while simultaneously using the new revenue to provide health care tax credits for taxpaying households. The government could also provide vouchers—which, for lower-income households, could be combined with the credit—so that more individuals and families can afford health insurance.”
Experts like Dr. Helms argue that even a modest cap would lead to a more efficient system:
“[A tax cap] ends the open-ended tax policy that has induced expansive benefits and cost-inefficient health delivery. Under the tax [exclusion]…employers and employees (and their unions) have had strong incentives to expand tax-free health insurance relative to taxable cash wages. The result has been a gradual increase in the scope of benefits with little regard to the cost-effectiveness of the covered medical services. A limit on what could be treated as an exclusion to taxable income would make it mutually beneficial for both employers and employees to redesign their health insurance policies…any additional tax could be avoided if the employer were willing to offer its workers a more cost-effective policy that does not exceed the cap. Under the present, open-ended tax policy, there have been very weak incentives for employers or employees to consider such changes.”
Taxing health insurance companies is a bad, backdoor alternative to the more sensible, more transparent policy of capping the exclusion for employer-sponsored health insurance.
Read more here.
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009