Ah, the word games Obamacarians do play. Latest in a series of obfuscations; attempting to depict the penalty for not buying health insurance under the individual mandate as a “tax penalty.”
Obamacarians employ that term because they are trying to turn a civil penalty–in essence, a fine–into a tax. Why? If they succeed in rewriting the meaning of the pertinent text in the law, Obamacare becomes more likely to pass constitutional muster under the general taxing authority of the federal government. But if it is, as actually written, a penalty or a fine, it is much more likely to be found unconstitutional as an unprecedented and breathtaking expansion of federal power under the Commerce Clause.
Here’s a recent example of the “tax penalty” ruse. From William D. Lynch’s, “Healthcare Reform Law: What’s the Big Deal?”, published in the LA Times“:
The Patient Protection and Affordable Care Act created a monetary incentive for all taxpayers to obtain health insurance. Beginning in 2014, people without insurance will pay more to the IRS than people with insurance. Like the tax code as a whole, the rules for calculating the size of the penalty are incredibly complex…This tax penalty is known as “the individual mandate.”
The bottom line: There really is no such thing as an individual health insurance mandate. No one gets carted off to jail if they fail to buy insurance. Instead, they pay a tax penalty just like the tax penalties we face for other commercial decisions we make each day. Under Obamacare, Americans are free to choose whether or not to buy insurance, just as they are free to choose whether to buy a house, or solar panels, or hybrid cars, or child care or cigarettes. Let’s stop suggesting otherwise, and start referring to the individual health insurance incentive.
Nice extremely disengenuous try, but no cigar.
To see why I am right, let’s go together to the Affordable Care Act, section 1501. And there we find that individuals are legally required to buy health insurance. From the text of this awful law:
An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.
That’s an order, aka a “legal requirement,” or to use another term, a” mandate!” The penalty is not an “incentive,” it is a civil sanction for not obeying the law.
If an applicable individual fails to meet the requirement of subsection (a) for 1 or more months during any calendar year beginning after 2013, then, except as provided in subsection (d), there is hereby imposed a penalty with respect to the individual in the amount determined under subsection(c)
The penalty is never referred to as a “tax penalty,” but merely a “penalty.” And while it is collected by the IRS–it is assessed by the Secretary of Health and Human Services:
In general.–The penalty provided by this section shall be paid upon notice and demand by the Secretary, and except as provided in paragraph (2), shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.
Finally, have you ever heard of a case in which failing to pay a tax would be exempt from criminal sanctiion, or of properties being exempt from liens?
In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure…The Secretary shall not–(i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or (ii) levy on any such property with respect to such failure.”.
Lynch’s piece is opinion and political advocacy. But, I have also noticed the media running with the term “tax penalty” in general reporting, which is a subtle form of bias, perfectly consistent with their usual practice of adopting the desired lexicon of the side they are rooting for.
Bottom line: It’s not an “incentive,” it is a mandate because we “shall” by law purchase insurance. If we don’t a penalty–not a tax–is imposed by the Secretary of HHS. Unlike unpaid taxes, it is not a crime to not pay the civil penalty, nor can the government put a lien on real property. Plus, Obamacare supporters swore it wasn’t a tax when they were trying to pass it. Too late to change it now.
October 9th, 2011 | 11:37 pm
I tease you about your being a lawyer, Wesley (and I have no intention to stop), but this is a good example of how we all benefit from your legal expertise. Wading through the verbiage of the PPACA must have been a Herculean task–like the one involving a stable. Thanks for giving us the benefit of your analysis and explanation.
October 10th, 2011 | 8:00 am
We must repeal Obamacare, and not only repeal it but defeat the whole idea of socialized medicine.
No matter how a bill centralizing medical care or medical funding decisions under the feds is written, there will be scores of these abominations in the carrying out of the law. We must mount a campaign of ideas, not just a power-politics tactic to rid ourselves ASAP of Obamacare and its namesake.
Harryhammer Reply:
October 10th, 2011 at 1:39 pm
@Joe DeVet,
Joe,
You can criticize the WHO’s rankings of health care systems all you want.
Incidentally, America’s health care system ranked 37th in the world and cost twice as much as systems that ranked much higher.
You can criticize universal health care all you want.
Every civilized nation on earth has universal health care.
Incidentally, the United States is the only industrialized nation on earth without universal health care.
The entire U.S. Defense budget for 2010:
$685.1 Billion
A full hip replacement in Canada costs $11,600.
Think of that 1 year Defense budget as a CT scan, a high resolution MRI, Cataract surgery, and a full hip replacement for every senior in America.
• Cataract surgery: $2,000
• MRI with high resolution: $755
• CT scan: $575
• Full hip replacement; $11,600
$14,930 x 39,472,928 = $589,330,815,040
We’ll still have $95 billion left over for Band-Aids, tongue depressors and Q-Tips.
October 10th, 2011 | 5:32 pm
[...] gambles on health reform before Supreme CourtAmerican Medical NewsThree Villages Times -First Things (blog) -UPI.comall 44 news [...]
October 11th, 2011 | 10:56 am
this is a good post
The last draft of the ACA changed “tax” to “penalty”
The previous two drafts used “tax” and the Dems thought it would be politically advantageous to use “penalty”, thinking the two are interchangeable
It’s my understanding this may not be the reality as, if I recall, there was a SC case (starts with an “F” or “L”, I think) dealing with “tax” vs. “penalty”
It’s clear the intent is to be the same (penalty=tax), but this change could be a big mistake…
Wesley J. Smith Reply:
October 11th, 2011 at 10:59 am
Legislative history is used by courts to interpret statutes that may be vague. That change is likely to be viewed as stating the explicit intent of Congress that the penalty not be considered a tax.
October 11th, 2011 | 8:14 pm
Thank you for your analysis of penalty vs tax.
However, please consider the constraints placed on Congress actions to spend money in accordance with Article 8 of the Constitution
It’s interesting that individuals cite the tax ability of the federal government to sanction spending actions (such as Obamacare). As I read Article 8 of the Constitution “Powers of Congress” it states that “The Congress shall have the Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…”
Congress can only use the taxes collected to appropriate funds for the specific items stated in the remainder of Article 8; items such as Post Offices, pay debts, raise and support an army, etc. The phase “… and provide for the common Defence and general Welfare of the United States…” is constrained to the designated powers, not by an ever expanding definition that the government can do whatever it decides with no inhibition as to scope and impact.
Regarding Amendment XVI which authorized the power to lay and collect income taxes there is no authority to spend collected money, only the ability to collect it, which leads to the definitions on the ability to spend based on Article 8.
October 13th, 2011 | 11:17 pm
Well, I for one, have no intention of being bullied into purchaseing obamacare in 2013. As you point out, its a penalty they can not enforce, I will not pay it. I have not used medical care outside of basic dental visits and a trip to a chiropractor every few years, in my adult life, and I am 33.
I see no good reason to [throw] away money on insurance when I clearly have no current use for it. And since obamacare covers preexisting condition care, if I ever do need it, I can get it.
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