Obamacare, taxes and ducks take II

One of the newest liberal lines is that the President has not and does not want to raise taxes, well except for maybe anyone making over $250,000 a year. A few weeks ago we wrote that the Obama care bill is actually a tax bill. But “no” my liberal friends cried, “it’s a health care bill!” So I thought we should look at some of the health care issues addressed in the bill.

1. Medical Device Manufacturing Tax; a 2.3 % tax on medical device makers, every pacemaker, prosthetic limb and blood pressure monitor will increase in price in six months. Just to make the tax more insidious, it is on gross sales so even companies doing cutting edge medical development who have not been able to turn a profit will owe the tax. Interesting approach to decrease the cost of health care, increase the cost of medical equipment.

2. Increase of the deductible medical expenses; currently Americans are able to deduct their medical expense’s greater than 7.5% of their adjusted gross income, in six months that will increase to 10%. Interesting approach to lower people health care expenses, take away their tax deductions and collect billions of new tax paid.

3. Flexible Spending Account Care; in six months 24 million Americans will have a $2,500 cap on their FSA where none existed before. By restricting these pretax programs, ObamaCare effectively increases the taxes on medical care for everyone with a FSA. We are getting a theme here, lower the cost of health care by increasing taxes. Remember the “if you like your health insurance you can keep it” promise?

4. Limiting Health Saving Accounts; starting in 2011 the bill written to increase our access to HSA limited what HSA accounts can be used for. Before Obamacare passed people with HAS accounts could use their pretax HSA dollars for over the counter medications. So no reason to go to the doctor for a prescription to Ibuprofen, not any more, buy the product with after tax money or go to the doctor so you can use your HSA account. “You can keep your health care if you like it” lie take two.

5. A new ObamaCare surtax takes the top capital gains rate to 23.8 percent and top dividend rate to 43.4 percent. Does it seem strange that the health care bill is changing the capital gains rate? As much as 135 billion dollars out of American’s pockets into the federal government. The liberals don’t really see this as a problem - it only affects wealthy people.

6. Medicare tax increase; employers will pay an additional 80 billion dollars over the next 10 years because of this increase in Medicare taxes, employers might want to use this money to pay their employees, or contribute to their employees’ health care. But instead they will contribute to the federal government.

Billions of new taxes collected so the government can then turn around and hand some of that taxed money back to the citizens. 290 times the ObamCare bill addresses taxes, every time increasing the cost of health care. The amazing thing about five of the six massive tax increases outlined above is they don’t take effect until after the 2014 election. It was so imperative to pass this bill, pass it so quickly that no one in Congress actually had time to read it, but almost four years after it passed and most of its major initiatives have not even gone into effect. The Presidents states that you can keep you existing health care insurance if you like it and then makes changes to existing HSA and FSA health plans. The President’s party states that the President has not raise taxes while a tax time bomb called ObamaCare sits on the books.

Maybe the President does not count tax increases in the health care bills as a tax increase - - but what were we saying about quacking like a duck?

When a tax is not a tax or when is a duck not a duck ?,

Tax- “money paid to government: an amount of money levied by a government on its citizens and used to run the government, the country, a state, a county, or a municipality”

I think what we have is a big misunderstanding. We thought while we were debating the Affordable Care Act (aka Obamacare) we were discussing a health care bill, but according to the recent Supreme Court findings it was actually just a revenue raising bill, a tax bill.

Maybe this all makes sense seeing the Obamacare bill really does not solve or even attempt to solve the whole problem of people without health insurance, or even to decrease the cost of health care. It merely attempts to make people pay a tax, or penalty if you do not have health insurance. The authors of Obamacare and the Supreme Court acknowledge that up to four million Americans will elect to pay the tax rather than buy health insurance.  Some other percentage of homeless or indigent people who are currently uninsured will likely remain like that.  An income tax fine does not have much effect on someone who pays no taxes.  So we decreased the number of people without insurance but we accept that over 10% of the 35 million people who have no insurance in 2012 will still have no insurance after 2014, but the IRS will collect a bunch of money.   

The arguments presented to the court by the government in support of Obamacare followed a rather circular path.

The first of the three items the government argued was: 

Because the individual mandate was a tax, the whole case should be thrown out. The Anti-Injunction Act bars a lawsuit against a tax until the tax is actually being collected, the government maintained because this tax was not being collected the law suit was not legal. In this argument the court disagreed with the government and said this was not a tax and the major proof was the bill describes the payment for not having insurance as a “penalty” the so the suit could go forward. In the courts findings they point out the bill uses the word tax many times, the fact that they used the word penalty must mean they did not intend this as a tax.

The second government argument was:

The government could mandate that individuals buy health insurance under the Commerce Clause. They surmised that if you did not buy health insurance that would still affected the health insurance industry,  so who buys health insurance could be regulated. The government felt it had the power to force you into a market so they could regulate your participation in that market. The court again rejected the government’s argument, saying that the government has the power to regulate a market but not to force you into that market. Re-read this last paragraph please – our government is looking for justification to FORCE us into a market – force us to buy something.  As a side note Liberal representatives have been using the commerce clause to control more and more of life and personal behavior starting with FDR. In 1942 the government even argued and won a case that said the government could regulate a farmer’s corn production even though he grew the corn only for his personal use. In that case the government was trying to drive up the price of wheat by limiting production using the commerce clause, a farmer named Filburn was ordered to destroy a portion of his wheat crop and pay a fine even though not only was none of his wheat involved in intrastate commerce, it was not involved in commerce at all, it was for his and his families consumption. The government argued if he had not grown the wheat he would have to buy the wheat so that does affect interstate commerce. Yes in that case we had the federal government actively working to drive up the price of food and punishing people including jail time for people who attempted to provide their own food.  The fact that in the middle of a depression, while people starved to death the federal government was attempting to increase the cost of food is a subject for a whole different blog.

The third argument by the government and the one that the court agreed with and upheld:

 Obamacare really was just a tax collected if someone did not buy health insurance, not a federal mandate that you actually buy it. The government has great legal latitude to raise taxes and the court agreed.

So the court that found in argument one that the individual mandate to buy health insurance was not a tax and found in argument three that this was a tax and because of that, the bill is constitutional.

The President and his administration stated plainly a number of times during speeches and debates, even after the court decision, that the individual mandate was not a tax argued before the court in their first argument that it was a tax and then declared victory when the court agreed even while making speeches saying it’s not a tax.

The court spent 190 pages explaining how this was all very proper and legal.  Lawyers and scholars will explain for years to come why this is so - - but a wise man once said “if it walks like a duck and quacks like a duck, it most likely is a duck”.  In the minds of government and lawyers apparently that does not hold true.