PLANK JULY 5, 2012
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On Friday the Bureau of Labor Statistics will release the latest monthly employment report and, at that point, the political conversation will probably turn away from health care and back to the economy. But with nothing to do between now and then—except enjoy time with your family, if, like me, you’re still on vacation—Washington is preoccupied with the debate over whether the individual mandate is a penalty or a tax, and whether Mitt Romney will keep changing his mind about which side of that debate to take.
The distinction between a tax and a penalty certainly has legal significance. At least in theory, the former is constitutional while the latter is not. But, as Ezra Klein notes today, the policy is the same either way. People who have access to insurance but choose not to get it are supposed to pay the government a fee. The fee goes as high as 2.5 percent of personal income, although there are exemptions. If you have religious objections to scientific medical care, you don’t have to pay the fee. If you face financial hardship, you don’t have to pay the fee. And so on.
Politically, the distinction between a tax and a penalty matters because Obama has famously promised, ever since his campaign, not to raise taxes on people making less than $250,000. I never liked that pledge and never thought Obama should make it, so I have no problem with tweaking him for that. On the other hand, this is not a broad-based tax on all Americans. It’s a tax only on people who engage in certain behavior—namely, declining to buy health insurance that the law makes available. Like Will Saletan says, it’s basically a “sin tax,” very much like the ones that cigarette users pay every time they buy a pack.
Also, the number of Americans who will actually make “shared responsibility payments,” as the law officially calls them, is exceedlingly small. The Congressional Budget Office estimates that about four million Americans will end up making the payments. That’s not much more than one percent of the population. And if I’ve done my math correctly, at least a quarter of them (and probably more) qualify as “wealthy” by any reasonable definition.
You can decide for yourselves whether Obama’s embrace of the mandate constitutes a gross betrayal of principle. What you can’t take seriously are claims, which Romney and the Republicans keep making, that the Affordable Care Act constitutes the largest tax hike in history. As Politifact and other independent groups have pointed out, this is not even close to true.
In the aggregate, the mandate itself is tiny: It will raise $28 billion over the next decade, which is a relative pittance in the context of a law with outlays of more than $1 trillion. The Affordable Care Act has plenty of other taxes and, if you throw those into the mix, the revenue total goes way up. But even that sum would not put the law’s tax increases in the top ten and, by the way, most of those taxes don’t hit the middle class directly.
Kevin Drum explained this the other day:
Let’s be fair: When Republicans talk about ACA’s tax increases, most of them are talking about all the taxes in the bill, not just the penalty. But they’re still off base. There have been 15 tax increases of significant size since 1950, and Jerry Tempalski, a tax analyst in the Treasury Department, has estimated the size of all of them as a percentage of GDP. Tempalski hasn’t estimated the eventual size of ACA, but PolitiFact took a crack at it using the same methodology, and they figure that ACA amounts to a tax increase of 0.49% of GDP seven years from now. That places it tenth on the list.
It’s fair for Republicans to complain that ACA includes a bunch of new taxes. It does. Most of them fall on high earners and corporations, not the middle class, but they’re still taxes. However, the “biggest tax increase in history” nonsense is crazy, and no news outlet interested in accuracy should let it pass without challenge.
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8 comments
"However, the “biggest tax increase in history” nonsense is crazy, and no news outlet interested in accuracy should let it pass without challenge." Ha! The press won't counter this at all. And the pube attack machine is already hammering this meme hard. I saw an "Americans for Prosperity" ad many times in the last 48 hrs. on local TV claiming it's a huge tax on everyone. The ad must have been running every 15-30 minutes during prime viewing hours on every local station in the Raleigh/Durham NC area.
- tmmats
July 5, 2012 at 12:39pm
"Largest Tax Increase in History" -- and the Bush Tax Cuts haven't even lapsed yet. Man, if you use up all your superlatives on dinky stuff like this, when the REAL tax increases happen (and the deficit demonstrates they're desperately needed) then all you can do is repeat yourself. Which reduces the shock value of your point. What, is ANY tax increase "The Largest In History", because that expresses how much you HATE any tax increase? If so, there's something very wrong with your logic and reasoning.
- AllanL5
July 5, 2012 at 1:15pm
Logic and reasoning don't come into it. The GOP messaging machine began taking its cues from Joseph Goebbels quite some time ago.
- AaronW
July 5, 2012 at 3:03pm
"The distinction between a tax and a penalty certainly has legal significance. At least in theory, the former is constitutional while the latter is not." No. Penalties are not ipso facto unconstitutional. What five justices said was that the Commerce Clause (and the Necessary and Proper Clause) did not provide authority for Congress to enact the individual mandate provision -- this was not because that provision _is_ a penalty, but rather because it regulates inactivity.
- TARFON
July 5, 2012 at 3:03pm
so whatever happened to the personal responsibility principle that Romney talked so much about (he didn't even call the mandate a mandate, much less a tax). All Democrats have to do is rerun what Romney said and asked him why he changed his mind. http://www.democraticunderground.com/101738667 The mendacity of Romney is astounding, he makes Nixon look virtuous.
- blackton
July 5, 2012 at 4:49pm
AaronW "Logic and reasoning don't come into it. The GOP messaging machine began taking its cues from Joseph Goebbels quite some time ago." Me thinks that the propaganda wars of the contemporary right make Goebbels and his lethal boys look like amateurs. Hell, the Soviets were much better at propaganda than Goebbels. Without the death machine behind him Goebbels would have been a joke. Any way, it's much harder in a world of 24/7 news to keep up the propaganda, but the GOP has managed to do it and do it very well. It's the only thing they know how to do well.
- arnon1
July 5, 2012 at 9:27pm
Good op ed [piece in the NY Times telling Demos to fight back against conservative prevarications about the economy and worker's rights: "Workingman’s Constitution" By WILLIAM E. FORBATH http://campaignstops.blogs.nytimes.com/2012/07/05/workingmans-constitution/?ref=opinion
- arnon1
July 6, 2012 at 1:13am
Of course it's not a tax, though the red-meat Tea-Partiers want to characterize it as one (now that they have no choice). This penalty is nothing like a tax. And this decision we're all turning somersaults about is a farce--calling the exact same action a tax instead of a legitimate exerecise of the commerce power makes absolutely no difference in what the Court is saying about the government's power to intervene in this decision (which, make no mistake, I think it should have). But for Roberts to change sides and call it a tax does not make him a hero or a statesman--it is the most profoundly cynical, political, and unprincipled act yet of his immoral and self-seeking tenure. If he thought the ACA was an illegitimate overreach, he should have said so and exposed his baseless, activist, elitist, but honest "legal" views for what they are. Otherwise, with this kind of log-rolling, we just have a second legislative branch in a for that not even I can appreciate. And the Medicaid part of this decision was just as stupid and unprincipled. Especially for a "conservative" court, why couldn't the government have said to the States, either you provide this expansion with us giving you most or all of the money, or else you're out? The govermment can cut off Medicaid tomorrow if it wants to (I don't advocate that course of action), and it certainly has the right to stipulate what has to be each State's Medicaid State plan if they want to take the money--and what happens if it isn't there. The Medicaid holding was inserted in the decision just to make it look like Roberts was making some sort of reasoned decision instead of a purely political calculation. And of course, this cosmetic gesture probably hurts the people most in need, the people the law was most conerned with, because as usual, no one on the Court really cares what happens to them. If Roberts really wrote both sides of the decision in this case, and the conservatives let him, they should all be impeached--Roberts first of all for lying like a rug about how he would conduct himself in office.
- mlottman
July 6, 2012 at 10:50am