I’m from the IRS and I’m here to help you comply
Last Thursday the Supreme Court upheld the Affordable Care Act (the affordable part is a matter of some dispute), more popularly known as Obamacare. Seems the Chief Justice believes that financial coercion in the form of taxes is acceptable, but the Commerce Clause cannot be extended to validate coercion in the form of fines.
Obama’s White House still denies the $695 you get nailed with is a tax. Tax or fine, you have to pay for not wanting to put your liver under the jurisdiction of Heath Commissar Sebelius’ Office of Compliance and Bureaucratic Sclerosis. Here our president seems a bit ungrateful. If he is correct and the coercion behind the mandate is a fine, the law is unconstitutional and he ought to be at least minimally grateful to the Chief Justice for hauling his health-care bacon out of the fire.
If the White House is correct, Obamacare might be the only non-tax reform bill ever to begin with the hiring of more than 14,500 new IRS agents whose principal mission in life is determining whether your insurance policy needs to be taxed. Oh, of course he admits there are some taxes on those pesky billionaires earning more than $200,000 a year, but the precious middle class is left in peace.
There are more than 20 new taxes in the 2,700-page monstrosity that Ms. Pelosi cobbled together in 2010. Here is a rundown of the seven that apply to the under $200,000 a year hoi polloi.
1. The Individual Mandate Excise Tax. By 2016, a couple will pay either $1,360 or 2.5 percent of their adjusted gross income.
2. Restriction on over-the-counter drugs. Employees with health savings accounts, flexible spending accounts or health reimbursement accounts cannot use pre-tax funds from these accounts to buy over-the-counter medicines for allergy relief and such. Makes sense. If putting another 30 million people in the system will reduce health care spending, more mandated visits to doctors will further reduce costs.
3. The Healthcare Flexible Spending Account Cap. They get the folks two ways on this one. Starting in 2013, there is a pre-tax limit of $2,500 and employees forfeit unused funds in their accounts at the end of the plan year.
4. The medical itemized deduction increase. Starting in 2013, taxpayers will only be allowed a deduction for expenses to the extent they exceed 10 percent of adjusted income, up from 7.5 percent now.
5. Health Savings Account withdrawal penalty. Since Jan. 1, 2011, taxpayers who withdraw money from health savings account for non-medical expenses before age 65 face a 20 percent penalty, up from 10 percent before.
6. The indoor tanning services tax. There is a new excise tax of 10 percent on indoor tanning salons. The government has yet to figure out how to tax suntans acquired on the beach. Don’t worry, they’ll figure out something.
7. The Cadillac health insurance plan tax. Starting in 2018, there will be a new 40 percent excise tax on taxpayers who are covered by high-cost health insurance plans. Can’t have some folks with better health care than others; can we? Yes we can. Labor unions are exempt.
White House Chief of Staff Jack Lew can deny the mandate is a tax as long as he doesn’t mind looking ridiculous. (Keep in mind that if it is a fine, it is an unconstitutional extension of the Commerce Clause.) The new taxes on the middle class along with the 14 others on the $200,000-a-year billionaires and small business will extract another $800 billion from the economy over the next 10 years. It is estimated that more than 60 percent will come from people earning less than $100,000 a year. Sadly, even then it won’t be enough to pay for this massive new entitlement.
If anyone is so delusional they believe any government-controlled program will deliver better results than the flawed private sector, they better hope that mental health is not grounds for priority check-in at the “death panels.”
If “death panels” is a bit too strong a description of the Senior Citizen’s Counseling Program, consider the direction in Britain. The British National Health Service has what is called “The Liverpool Care Pathway.” It is a term for denying all care to the terminally ill. Both the UK’s Daily Mail and the Observer report that some doctors think that last year more than 130,000 aging Brits were put on the pathway prematurely. In other words, inconvenient old folks who cost too much were dispatched to their reward a bit ahead of time. The lesson here? What is euthanasia to some folks, to others it is just a bit cost saving.
There are lessons to be learned from Canada. It seems Canadians suffer long delays before getting necessary treatment. Among those who believe this is the Supreme Court of Canada. In a ruling in Chaoulli v. Quebec, the court held that delays in delivery of health services in Canada’s system violated the “Quebec Charter of Human Rights and Freedom” and the “Canadian Charter of Rights and Freedoms.” (For those questioning my veracity, the citation for the decision is: 1 SCR 791, 2005, SCC 35.)
Our experience doesn’t promise to be any better. The Washington Post exposed a healthcare disgrace at Walter Reed Army Hospital in 2007. Filthy rooms, veterans buried under mountains of paper work and ignored by indifferent staff, seemed to be the norm in one section of the hospital. The government even has trouble doing right by the veterans after they’re buried. Arlington National Cemetery was rocked by scandal in 2010. Bodies buried on top of each other, more than 300,000 graves improperly marked, and bodies buried in the wrong grave.
A government incapable of managing even one hospital and the national cemetery might think twice before trying to manage the nation’s complex healthcare system.
The new taxes, rules and regulations can be a bit confusing and you may not know what to do right away. Don’t worry. Soon your doorbell will ring and a friendly voice will say, “I’m from the IRS, I’m here to help you comply.”