December 16, 2019

Apparently This ObamaCare Thing Is a Big Deal But May or May Not Be a Tax

Unlike many pundits, wonks and keyboard ninjas out there, I feel it is important to refrain from spouting off about ObamaCare at this point since I am neither a Constitutional law expert nor all that well-versed in decoding hundreds of pages of legislation. It wasn't just second rate bloggers getting the news wrong yesterday, of course, major news networks completely and publicly screwed it up too.

That said, this is still an important page in America's legislative history and – as an accounting website – I suppose it's worth dedicating a bit of space to yesterday's SCOTUS decision since the IRS is involved, tax or not.

In lieu of me going off on some unnecessary and probably ill-informed conservative rant, let's instead analyze the reactions thus far.

Stephen Moore writes in his Wall Street Journal opinion piece:

When Congress was debating for months and months, the Obama team argued that the individual mandate "is not a tax." This was to spare the White House the embarrassment of admitting that President Obama was violating right out of the box his sacred promise not to tax anyone earning less than $200,000. According to Congressional figures 70% to 75% of the "tax" falls on those who earn less than $200,000 per year, and that is 8 million non-rich people. So Mr. Obama argued this was a mandate and a fine to enforce the requirement to buy health care.

But then in front of the Supreme Court and lower courts, the Obama legal team shifted strategies and argued it was a tax after all. The Supreme Court has traditionally and regrettably granted unlimited taxing authority to the Congress and they did so again on Tuesday.

OK, so that's one point on the "it's a tax" team. Let's move on.

Yahoo News, on the other hand, attempts to stay somewhat neutral by simply sharing the White House's take on it:

The White House argued on Friday that the individual mandate at the heart of Obamacare is a penalty, not a tax, contradicting the Supreme Court's 5-4 ruling a day earlier upholding the historic health care law. But if it is a tax, blame Mitt Romney, spokesman Jay Carney suggested.

"It's a penalty, because you have a choice. You don't have a choice to pay your taxes, right?" Carney told reporters aboard Air Force One. President Barack Obama was on his way to Colorado to view the response to the worst wildfires in the state's history.

Wait what? That doesn't even make sense. But fine, moving on…

Naturally, Fox News has been predictably ticked off by the whole thing and probably beside themselves with joy at the idea of having tons to rage against from now until November:

Thanks to the ObamaCare ruling, not transferring money or value may now be taxed, the precise opposite of what a tax has been in the history of jurisprudence.

The dissent laments the scant words used by Chief Justice Roberts on the issue, and all that can be found is the following, surely to win this year’s circuitous argument award:

“Sustaining the mandate as a tax depends only on whether Congress has properly exercised its taxing power to encourage purchasing health insurance, not whether it can.” [Emphasis in the original]

In other words, Congress did it, therefore we assume they can do it.  Can you say, unchecked power?

While everyone else is busy making predictable comments about power grabs and/or rich guys who don't care about the little guys, FactCheck.org actually had a pretty decent spread of what the "tax" entails, who is going to pay it, and why you'd actually want to just opt in to insurance instead:

Who Collects?

The penalty will be collected by the Internal Revenue Service, which is one reason the chief justice cited for considering it to be a tax. In fact, the penalty is spelled out in Title 26 of the U.S. Code — the “Internal Revenue Code” — under Subtitle D — “Miscellaneous Excise Taxes.”

Partial Coverage

A tax is assessed for each month that a person is not covered. It is pro-rated, so that a person who is not covered for only a single month would pay 1/12th of the tax that would be due for the full year.

So, for example, the minimum tax per person for failing to get coverage would be $7.92 for each month of 2014, $28.75 for each month of 2015, and $57.92 for each month of 2016, when fully phased in.

Hopefully everyone can take it nice and slow over the weekend, chew over what the SCOTUS ruling means for not only the IRS but the entire country and talk it over come Monday. Or continue freaking out, whatever.

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