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The Individual Mandate Tax is a Tax


Posted by Ryan Ellis on Monday, July 2nd, 2012, 10:57 AM PERMALINK


On Sunday, White House chief of staff Jacob Lew and House minority leader Nancy Pelosi took to the morning shows to claim that the Obamacare individual mandate tax is not a tax. The plain language of the law says otherwise.

The Obamacare law employs several terms to describe the tax Americans will pay if they choose not to purchase “qualifying” health insurance (as defined by Obama-appointed HHS bureaucrats). These terms include "payment," "assessment," and "individual responsibility." All of these terms are describing the same Obamacare provision, which is undoubtedly a tax:

  • This tax is variously referred to as a "penalty," a "fee," or a "fine."  In fact, it's none of those things, precisely.  It's a tax.  The various synonyms used are designed to hide that simple fact.  The reason for wanting to do so is clear: since this tax will be assigned to most uninsured Americans (including those making less than $250,000 per year), it is a pretty apparent violation of the President's central campaign promise not to sign “any form of tax increase” on working families.
     
  • The evidence that this tax on the uninsured is in fact a tax comes from a thorough reading of the Obamacare law’s uninsurance tax section.
     
  • Title I of the Obamacare law says that "any penalty imposed by this section with respect to any month shall be included with a taxpayer's return under Chapter 1 [of the Internal Revenue Code (IRC)] for the taxable year which includes such month."  The procedure to collect the tax references Chapter 68 of the IRC.  Also in the law, a new Chapter 48 is added to Subtitle D of the Code (Miscellaneous Excise Taxes) in order to create the uninsurance tax.  Finally, the law continues to reference various parts of the Code that were amended in order to cover this new tax.
     
  • Anyone reading this precise language can see how this tax will be collected.  An uninsured individual will add the excise tax to the regular income tax burden on his 1040 Form every April. It is much like other excise taxes collected on the 1040 (early IRA withdrawal tax, for example).

[PDF of Press Release]

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