Obamacare

Obama's Hidden Fees

When the president does it, it's not a tax.

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President Obama's promise to raise taxes only on the wealthy was easy to make and easy to break. He broke it barely two weeks after taking office, and he will break it again if Congress passes the health care legislation he wants. But Obama has come up with a strategy to avoid the fate of George H.W. Bush: Although he will raise your taxes, he will never admit he is raising your taxes.

Campaigning in Dover, New Hampshire, in September 2008, Obama declared: "I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."                    

Five months later, Obama signed a bill that more than doubled the federal cigarette tax, which falls especially heavily on the poor. White House Press Secretary Robert Gibbs argued that it didn't really count, because "people make a decision to smoke." Similarly, White House spokeswoman Linda Douglass says financial penalties for failing to obtain medical coverage are not taxes because "a fee would only be imposed on those few who could afford to purchase insurance but refuse to do so."

Yet the fact that you can avoid a tax by changing your behavior does not mean it isn't a tax. You don't pay gasoline taxes if you don't drive, you don't pay property taxes if you don't own real estate, and you don't pay income taxes if you don't earn income. In this case, people are subject to the "fee" simply by virtue of living in the United States and choosing not to buy something the government thinks they should.

Douglass likens the individual health insurance mandate to state requirements that drivers have liability insurance and that parents educate their children. But people who violate such laws are subject to criminal penalties. Neither the House nor the Senate health care bill would establish criminal penalties for refusing to buy health insurance, presumably because due process requirements would make it hard to impose them.

Instead the bills would establish a "tax on individuals without acceptable health care coverage" and an "individual responsibility excise tax," respectively. "If you put something in the Internal Revenue Code and you tell the IRS to collect it," a tax expert told the Associated Press in September, "I think that's a tax."

The president disagrees. "For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase," he insisted during a squirm-inducing September 20 exchange with ABC's George Stephanopoulos. "You can't just make up that language and decide that that's called a tax increase." Stephanopoulos responded by literally getting out the dictionary to demonstrate that "a charge…imposed by authority on persons or property for public purposes" is commonly considered a tax.

If Obama can deny that a charge is a tax even when it's collected by the IRS and identified as a "tax" in the legislation creating it, he surely sees nothing tax-like in the money people are required to spend if they want to avoid that charge. Yet forcing people to buy insurance they do not want so their premiums can subsidize other people's health care looks a lot like a tax-funded welfare program, even if the money does not flow through the public treasury.

Furthermore, when businesses buy government-required health insurance or pay a penalty for failing to do so, that money comes at the expense of employee compensation. "An employer mandate should therefore be labeled an employee mandate," says the Cato Institute's Michael Cannon.  

"What we are saying," House Majority Leader Steny Hoyer (D-Md.) explained last week, "is everybody will contribute…to making sure that health care options are available to all of our citizens." So we're talking about a legally required contribution that will be used to provide a government-arranged benefit. If only there were a shorter way of expressing that concept.

Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist.

 © Copyright 2009 by Creators Syndicate Inc.

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  1. Instead the bills would establish a “tax on individuals without acceptable health care coverage”

    Poor people in my state don’t necessarily need health insurance to get health care. Will they be exempted, or will the Federal government provide subsidies for these people to purchase private insurance? If they are provided subsidies, will the Fed then cut funding for these programs? Will the State? Why would they need both?

    http://www.nj.gov/health/fhs/cphc/index.shtml

    http://www.state.nj.us/health/…..ndex.shtml

      1. So little time.

  2. “For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase,”

    For the Congress and the President to abuse the tax code in order to do an end run around the people’s due process rights regarding regulatory fines is not only a breaking a campaign pledge against tax increases, it is something much worse.

  3. The president disagrees. “For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase,” he insisted during a squirm-inducing September 20 exchange with ABC’s George Stephanopoulos. “You can’t just make up that language and decide that that’s called a tax increase.”

    You can’t just make up legislation that costs people money and decide that it is not a tax increase either. The President is a goddamned liar who insults the people’s intelligence.

    1. I disagree. There is hardly any intelligence left to insult.

  4. What came first: politics or lying politicians? The current administration has opened new frontiers in defamation of reality. Turn over a large, flat rock and observe Obama’s lackeys, slithering in the slime and muck. They abhor the light and anyone who shines it on them. And they are very much offended by the fact that, apparently, not all Americans are baboons.

  5. That photo there of Obama with the sign that says “Tax Relief For The Middle Class” would be alot more honest if it had said Wealth Relief For The Middle Class.

  6. The Obamassiah is even losing some of the media

    ‘V’ aims at Obamamania

    1. It barely seems different than the original, long before Obama. I am not sure it’s really what they want, after all I have barely met any writers who are conservative or libertarian, any who admit to it are met with open hostility. The whole damn industry are kool-aid drinkers.

  7. Penalty should be viewed not as tax but as the price of an option to buy insurance when one is sick. I have suggested that people should be allowed to sign a waiver to opt out the individual mandate. Those who opt out would not have protection from prexisting condition exclusion by the insurers. This solves the free rider problem.

    1. It’s not a mandate if you can opt out. And the statists pushing this Kool-Aid don’t WANT people opting out — they want 100% of the populace to be enrolled with some form of health insurance, no matter whether that makes financial sense for the individuals so coerced.

      1. To add to the comment about the opt-out, how I understand it, you would just be able to opt-out any benefits of the plan, your state will still pay all the taxes for it. So a state opting out would pay for something they never receive.

        1. They can’t have people opting out because those would be the smart people who make all the money and these are the people that have to pay for the poor to get free health care.

    2. UNFORTUNATELY, THE VERY PEOPLE WHO WOULD OPT OUT ARE THE PATIENTS IN THE EMERGENCY ROOM WHO CAN’T PAY. “forcing people to buy insurance they do not want” OF COURSE THEY DON’T WANT IT BUT THEY NEED IT. OTHERWISE, WE ALL PAY IT IN THE END.

  8. Obama gives new meaning to the term Orwellian.

  9. Those who opt out would not have protection from prexisting condition exclusion by the insurers.

    That’s the very ‘problem’ the libs are trying to ‘solve’.

  10. ‘V’ aims at Obamamania

    And the network has been frantically firing and rewriting since the accidental allegory got spotted.

    By mid-season, the aliens will be Alaskan vaginas that can only be killed by “green energy.”

    1. I must admit to watching the first episode. LOL at “universal healthcare”.

  11. Libs also believe one should be allowed to choose when fully informed of cosequences.

    1. Sure they do – as in “Your money or your life.”

      1. Or, “my fist, your face, or my gun, your mouth!”

    2. no, they think we are too stupid to understand and need everything dumbed down so that we make the “right” decision.

  12. We hold this Change to be self-evident, that all men, women, lesbians, gays, bisexuals and transgenders are created equal, that they are endowed by their Messiah with certain unalienable Privileges, that among these are Health, Security and the pursuit of Subsidized Automobiles. That to secure these cheap cars and free medicine, Gangs are instituted among men, women, lesbians, gays, bisexuals and transgenders, deriving their privileges from the rape of the masses. That whenever any Form of Rape becomes destructive of their ends, it is the Right of the masses to shut the hell up, or else.

    1. You know, this is a parody, but a little too true for my taste.

  13. So we’re talking about a legally required contribution that will be used to provide a government-arranged benefit. If only there were a shorter way of expressing that concept.

    I can’t come up with one yet, even in Obamaese.

    1. How about tax theft?

      1. I’m looking for something more progressive Orwellian.

        1. Gift?

  14. Libs also believe one should be allowed to choose when fully informed of cosequences.

    Libertarians, yes. Self-described liberals, absolutely not. After all, one might make the wrong choice.

    1. You’re getting warmer …

  15. Ah, yes. My first experience with this line of reasoning was about 18 years ago. While working at a government agency, I was helping out the new EEO manager with tech support, etc. When I used the word quota, I was admonished that we didn’t have quotas anymore they were now goals.

    I did myself no favor when I pointed out that a goal you were punished for not achieving was a quota. I’m sure there’s a note in my file somewhere.

    1. I’d consider that not in my file a badge of honor if I were you.

      1. Consider yourself fortunate that you still have a file.

    2. But it’s not a quota, it’s a goal. Clearly you don’t understand…

    3. I’m currently working on a project where we are monitoring various things with an embedded controller board. One of the features of this board is you can connect several of them together and monitor a ton of stuff all at once. When you do that, you designate one of them the “master” and all the other boards are “slaves”. This nomenclature is very common in the world of embedded controllers.

      A few weeks ago, I was in a meeting and explained all this to a group of people in my company from the various business units.

      Last week we had another meeting and one of the points that was brought up was the fact that the group felt it was better to call the slave boards “xboards” (the x stands for expansion). They felt that slave was a very negative term.

      I make it a point now to refer to them as slave boards at every chance. When they refer to an xboard, I wrinkly my forehead and pretend I have no idea what they are talking about. My goal is always to make them say “you know, an xboard is a slave board.”

      1. I’m currently working on a project where we are monitoring various things with an embedded controller board.

        Why does that statement give me the creeps?
        “Slave”? Not so much.

      2. I’d just like to say: I’m a EE and I fully appreciate this post.

      3. When you have the boards made, make sure you can choose the colors.

        You can make the “Master” white, and all the “Slave” cards black. That’ll really get under their skin.

      4. You know, there’s a real difference between a government official trying to play semantics to cover their lying ass, and a company who may understand that their customers may not appreciate the use of a ‘slave’ anything. I’ve been in IT for 25 years and I know there are lots of instances of master/slave references in the hardware world, but end users simply don’t care about our jargon, and if a company can eliminate the imagery the term ‘slave’ invokes and still get the meaning across, fine with me. I don’t think these situations compare at all.

  16. Wow, more broken promises, go figure!

    Rever
    http://www.private-web.se.tc

  17. Hey guys, don’t you get it! He’s not using the progessive tax anymore, it’s a flat tax! By issuing penalties and charges and what not, he’s “taxing” all of us, but it’s all voluntary! YAY EQUAL CHARGES FOR EVERYONE!

  18. The comparison of auto insurance to health insurance should be challenged any time it is brought up. There are two entities that require me to buy auto insurance. I am bound by state law to buy liability insurance that only covers any damage that I do to another person or his property. The lien holder on my auto loan requires me to carry comprehensive to protect their property. If my vehicle was paid for it would be my choice whether to buy comprehensive insurance. If I didn’t have a vehicle on the road I would not have to carry any auto insurance.

    1. But your antisocial behavior would result in millions of drivers descending upon emergency garages, driving up the cost of bumper replacements for everyone!

      1. It’s amazing how much higher a price mechanics will quote when they find out the insurance company is paying for the repairs.

    2. Cars do not have a pre-existing condition problem(they are not covered, period). For health insurance, individual mandate is needed to solve the free-rider problem if the insurers are required to cover those with pre-existing conditions. One simple solution is to allow people to opt out by signing a waiver, but they will no longer be protected from pre-existing condition exclusions by the insurers.

      I agree with you that people should be allowed to risk medical bankrupcies if it is not hurting other people.

      1. I remember a call to the NPR show “Car Talk” that went like this:

        “What kind of car problem do you have?”

        “Well, I own a 1982 Ford Fairmont…”

        “Oh, I know what YOUR problem is… you have a 1982 Ford Fairmont!”

        See, some cars DO have pre-existing conditions…

  19. What part of “not any of your taxes” does Gibbs not understand?

  20. Like so many other aspects of politics, it’s all semantics.

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  22. “Obama declared: “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” . . .

    “Obama signed a bill that more than doubled the federal cigarette tax, which falls especially heavily on the poor. White House Press Secretary Robert Gibbs argued that it didn’t really count, because “people make a decision to smoke.””

    Defining “tax” in Gibbs’ manner voids the word entirely of meaning. Isn’t it also a choice when people work or own land or purchase any other product? Those other things are called income, property, and excise taxes.

    Did not Obama himself use the term “sin tax to describe punitive sales taxes on unhealthy foods? So how does that differ from a punitive tax on cigarettes? Obama promised not to raise taxes on anyone making less than $250,000, but immediately broke that promise to all smokers in that income bracket . . . by levying a sin tax against them.

    A sin tax clearly qualifies as “any form” of tax. “Choice” has nothing to do with the definition of taxation except in the bizarro-statist lexicon, in which it is annotated with a great big asterisk which adds that it can be amended to mean anything they think it should in any given circumstance.

  23. Milton Friedman wrote fifty years ago in “Capitalism and Freedom” about how medical prices were going to go through the roof. He explains why this was so, which is very interesting, but the coolest part was his solution…Replacing the medical license with certification. It would be legal to practice without certification. Maybe most people would always pick the government approved doc or only go to the uncertified dr.s for a sprained-ankle but if price disparities got too high, people might start going to the more affordable non-certified dr.s and the Certified dr.s would have to either go out of business or compete. Either way there would be more M.D.s on the market and no rationing.

    .

    1. Friedman obviously tried to fit the messy reality to his elegant model. His solution at most addresses a tiny part of a large problem. Like Friedman, many authors of this maginze suffer a serious lacking of common sense impaired by a rigid ideology.

      1. I’ll take Milton Friedman over that idiot Thomas Friedman, any day of the week.

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  25. Andrew, is that the conclusion you came to after having read that section of the book or after reading a three sentence comment from a guy who said he found it interesting?

    It wasn’t quite so messy 50 years ago. He was predicting that it was about to start getting messy and he was right. I believe he was also right about how/why it happened and you should read it.

  26. It all depends on what the definition of “tax” is…

  27. What a bozo. What an ultrmaroon (As Bugs Bunny might say) How many sides of his mouth does Mr Bozama have to talk out of.

  28. The amount of so-called tax on healthcare insurance put forward by President Obama is mere pittance if compared to what people in developing countries pay to be insured. Besides, in my country many would welcome HEFTY taxes on cigarettes as inhaling third party smoke from indiscriminate smoking by inconsiderate smokers along corridors are surely killing us.

  29. Money collected by racketeering and extortion isn’t a tax.

  30. President Obama is a lawyer. Lawyers are liars.

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  32. Want new tax-I mean fees? Come to Minnesota where Mr. Pawlenty will give you a fix.

  33. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets..

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  43. Such prevarication is an unfortunate reality of many politicians. Would it be impolite to call it mendacity?

    I await with interest the Obama administration’s secret FISC court justification for their flagrant disregard of the Fourth Amendment…

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