THE INTERNET TAX MORATORIUM EXPIRATION
to Make the
Well, not quite—but it got your attention. Recently, 7-11 delivered 1.6 million petitions to Congress demanding that 7-11 be allowed to charge extra to customers who use credit and debit cards. Never mind that this is asking Congress to rip up a contract 7-11 has signed agreeing not to do this to us.
What’s the issue?
Whenever we go to the store or online to make a purchase, we often choose to use a credit or debit card. These aren’t free. Some company has to process these transactions, make sure everyone gets paid, etc. In order to pay for this convenience, merchant card companies charge the businesses that accept cards—usually somewhere in the neighborhood of 1.75% of the cost of whatever you and I buy (known as an “interchange fee”).
Naturally, the businesses selling things to us would like to be able to pay less for this service. Paying less for the same service is certainly attractive. I would like to pay less for my NFL Sunday Ticket package on DirecTV, but that's what it costs.
7-11 is trying to get around this little problem of reality by getting Congress to do their negotiating for them. House Financial Services Committee Chairman Barney Frank (D-Mass.) is marking up a bill this week, H.R. 2382, the “Credit Card Interchange Fees Act of 2009.” It would for the first time use the force of law to nullify valid contracts negotiated in good faith between the merchant card industry and retailers. The most pernicious action would be to allow businesses to charge us more for the privilege of using a merchant card (a practice we’re protected against by the current merchant card contract). The hope is that this Congressionally-obtained bargaining chip can be used to negotiate a lower interchange fee.
The retailers and Congressman Frank will tell you they want to be able to charge less to those who pay with cash. But unless Congress is going to get into the business of setting the price of everything from lattes to licorice, the reality is this will leave the base price the same and become a surcharge for card-swiping customers. The practical effect of this legislation is that everything we buy could cost more if we use a credit or debit card rather than cash.
You might remember that when preening Congressmen bash merchant card companies this week.
“There’s going to have to be revenue in this budget,” said Podesta, Clinton’s former chief of staff and co-chairman of President Barack Obama’s transition team, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing today.
A so-called consumption tax would “create a balance” with European and Japanese economies and “could potentially have a substantial effect on competitiveness,” said Podesta. Value- added taxes in Europe and Japan encourage savings by taxing consumption.
Podesta said such a tax may be regressive, but can be balanced by exempting some products and using “the money to support low-wage workers.”
If this sounds familiar, it should. During the Memorial Day recess, Obama Administration officials refused to rule out a VAT. House Ways and Means Committee Chairman Charlie Rangel (D-NY) suggested that a VAT might be a good way to pay for Obamacare.
It goes without saying that a value-added tax is applied to most everything consumed by everybody. Not only does that make it highly regressive, it also is a clear violation of President Obama's repeated promise not to raise "any form" of taxes on families making less than $250,000 per year.
ATR has run an Anti-VAT Congressional caucus since the early 1990s. It currently has 54 Congressmen and 4 Senators. We sent a letter (House, Senate) to the Hill today trying to punch up that number.
It's coming. The Left does not have enough money to pay for everything. A VAT is too tempting for them.
This week, the Senate Finance Committee will be considering amendments to the Baucus-Obama government healthcare plan. The full list of amendments on the tax side can be found here. Below are some I thought were noteworthy:
Very quickly, here are the tax increase changes from Baucus' original plan to the Chairman's mark:
The Joint Tax Committee has come out with an official revenue score of all the tax increases contained in the Baucus-Obama plan considered by the Senate Finance Committee this week.
The overall score is a net tax hike of $357.7 billion over ten years.
Note: This does NOT include the revenue effects from the excise tax on the uninsured. This is most likely because the last-minute "chairman's mark" reduced the tax on families making more than 300 percent of the federal poverty line from $3800 to $1900, and Joint Tax just didn't have time to re-do the numbers.
In a truly brazen and out-of-touch move, the Obama White House continued to dig in its heels yesterday in the face of President Obama’s ridiculous assertion that an excise tax is not a tax. Below we break down how the White House staff fumbles and bumbles a defense of their boss’ willful ignorance of the English language. First, here is what the plan written by Senator Max Baucus’ staff says about the matter:
“Excise Tax. The consequence for not maintaining insurance would be an excise tax...the excise tax would be assessed through the tax code and applied as an additional amount of federal tax owed.”
Now, here’s what White House spokesman Linda Douglass had to say, with our analysis:
The White House on Monday reiterated that it doesn't view the fee as a tax. Officials said Americans are already paying as much as $1,000 a year in higher medical costs to subsidize caring for the uninsured, and would save money if lawmakers pass the health overhaul. They noted that lower-income people would get federal help to buy insurance and avoid the penalty.
ATR: The fact that people might be paying for uncompensated care has nothing to do with the fact that the additional cost in the Baucus plan is a TAX, as the President has denied and his staff has reiterated, even in the face of plain language. Also, the fact that poorer Americans are getting subsidized doesn’t change the fact that the Baucus-Obama excise tax will fall squarely on families making less than $250,000 per year (in violation of Obama’s repeated campaign promise).
"People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school," said White House spokeswoman Linda Douglass. "A fee would only be imposed on those few who could afford to purchase insurance, but refuse to do so."
ATR: An auto insurance mandate doesn’t translate into people having auto insurance, as mandate-state California demonstrates with its 18 percent uninsured motorist rate. As for the school mandate, the White House just managed to threaten the vote-moving issue of millions of home-schooling parents who don’t want the government forcing their child to go to government school.
Getting back to the excise tax, would this only apply to “a few who could afford to purchase insurance, but refuse to do so?” The excise tax would apply to any uninsured household earning income at least at the federal poverty line, which is $21,834 for a family of four with two children. The great majority of the uninsured are above the federal poverty line, and would have to pay this new excise tax.
There's a lot in the news today about President Obama's seeming ignorance of the $3800 excise tax contained in the Baucus-Obama healthcare plan.
You might have forgotten that there is another.
In H.R. 3200 (the Pelosi-Rangel-Obama version of reform), there is an income surtax on the uninsured of up to 2.5% of adjusted gross income, or the average premium cost, whichever is less. So, a family making $70,000 and choosing not to insure would face a tax hike of $1750.
What makes the Baucus-Obama tax of $3800 on this same family so odd is that Democrats in Washington seemed to have learned NOTHING from the August recess town halls or the 9/12 rally on Washington. Instead of scrapping this unpopular tax, they've doubled it!
Yesterday, President Obama obstinately refused to acknowledge what is obvious to anyone who reads the Baucus-Obama government healthcare bill: it has a massive tax increase ($750 to $3800) on families who choose not to enroll in Obamacare. From Page 29:
“Excise Tax. The consequence for not maintaining insurance would be an excise tax... the excise tax would be assessed through the tax code and applied as an additional amount of federal tax owed.”
But those are not the only new taxes in the Baucus-Obama plan:
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