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Monthly Archives: June 2012

Obamacare: A Tax When It Needs To Be

The Supreme Court ruled 5-4 that Obamacare is a tax.

The problem with this decision is that in order to challenge a tax in court, under the Anti-Injunction Act, the tax must first be assessed.  Thankfully, to address my confusion, Chief Justice John Roberts explains, writing for the majority opinion, that it actually is not a tax, but a penalty, thus, the Anti-Injunction Act does not apply:

“The Anti-Injunction Act applies to suits ‘for the purpose of restraining the assessment or collection of any tax.’ Congress, however, chose to describe the ‘[s]hared responsibility payment’ imposed on those who forgo health insurance not as a ‘tax,’ but as a ‘penalty.’ There is no immediate reason to think that a statute applying to ‘any tax’ would apply to a ‘penalty.’

Congress’s decision to label this exaction a ‘penalty’ rather than a ‘tax’ is significant because the Affordable Care Act describes many other exactions it creates as ‘taxes,’”

This is consistent with the dissent, which argued that there is “a clear line between a tax and a penalty: “‘[A] tax is an enforced contribution to provide for the support of government; a penalty . . . is an exaction imposed by statute as punishment for an unlawful act.’”

This is also consistent with how Congress wrote the legislation, and with how the government argued it – the statute being the individual mandate, and the unlawful act being non-compliance.

Roberts concludes that since it was not written, or intended as a tax, but as a penalty, the case may continue:

“The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-injunction Act,” writes Roberts. “The Anti-Injunction Act therefore does not apply to this suit, and we may proceed to the merits.”

Simple enough, it’s not a tax it’s a penalty, on to the merits, where we shall witness the transformation of the penalty, back into a tax.

The government’s primary argument was that the Act was a valid exercise of Congress’s authority under the Commerce Clause.

The Court rejected this claim, stating that instead of regulating commerce, “it instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce.”

This is where Roberts turns to Congress’s taxing authority:

“The most straightforward reading of the mandate is that it commands individuals to purchase insurance.  After all, it states that individuals ‘shall’ maintain health insurance.  Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. But, for the reasons explained above, the Commerce Clause does not give Congress that power.

Under our precedent, it is therefore necessary to ask whether the Government’s alternative reading of the statute—that it only imposes a tax on those without insurance—is a reasonable one.

Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes.  That, according to the Government, means the mandate can be regarded as establishing a condition—not owning health insurance—that triggers a tax—the required payment to the IRS.

Under that theory, the mandate is not a legal command to buy insurance. Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.

It is of course true that the Act describes the payment as a ‘penalty,’ not a ‘tax.  But while that label is fatal to the application of the Anti-Injunction Act, it does not determine whether the payment may be viewed as an exercise of Congress’s taxing power.”

Roberts simultaneously views the individual mandate as a penalty for the purposes of the Anti-Injunction Act, and as a tax for the purposes of Congress’s taxing authority.

“The same analysis here suggests that the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty,” he says.

To clarify, by not having health insurance, individuals will pay a “shared responsibility payment” which is a penalty for not having health insurance.

This penalty, though, is technically a tax, which, for the purposes of complying with the Anti-Injunction Act, is a penalty.

Not complying with the law, however, is not unlawful – an individual will simply have to pay a tax as a penalty for not complying with the law.

Aren’t you glad I cleared that up for you?

-Leebo

House Holds Holder In Contempt Of Congress

What the heck are you hiding?

via: Washington Times

The House on Thursday cited Attorney General Eric H. Holder Jr. for contempt of Congress in a historic vote weighted with political significance — though it does little to break the stalemate over his decision to withhold documents regarding the Justice Department’s actions in a botched gunwalking operation.

The House voted 255-67 to hold Mr. Holder in criminal contempt in a vote that amounted to a political spanking for the attorney general and President Obama, underscored by the 17 Democrats who joined Republicans.

Most Democrats walked out of the vote in a protest led by the Congressional Black Caucus.

The vote marks the first time an attorney general has been held in contempt by a chamber of Congress.

Beneath The Office Of The Presidency: “Still a BFD”

Stay classy, libs.

In case you missed it, BFD means “Big F***ing Deal.”

Obamacare Upheld By Supreme Court In 5-4 Decision

There’s only one way to get rid of it now.

via WaPo

Chief Justice John G. Roberts Jr. on Thursday joined the liberal wing of the Supreme Court to save the heart of President Obama’s landmark health-care law, agreeing that the requirement for nearly all Americans to secure health insurance is permissible under Congress’s taxing authority.  Even as it upheld that central component of the Patient Protection and Affordable Care Act, however, the court modified another key provision of the law, ruling that the federal government cannot withdraw existing Medicaid funding from states that decide not to participate in a broad expansion of Medicaid eligibility.

FLASHBACK: Obama Says Mandate Is “Not A Tax”:

FLASHBACK: WH Spokesman Robert Gibbs Insists It’s Not A Tax:

The Executive Director of the Democratic National Committee sent out this Tweet earlier today:

Stay classy, libs.

Market Nosedives After Obamacare Ruling:

Obama In 2008 Saying He Would Not Raise Any Tax On Those Making Under $250,000

A List Of 20 New Or Increased Taxes To Take Effect As A Result Of Obamacare:

via: ATR

1. Excise Tax on Charitable Hospitals (Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS. Bill: PPACA; Page: 1,961-1,971

2. Codification of the “economic substance doctrine” (Tax hike of $4.5 billion).  This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113

3. “Black liquor” tax hike (Tax hike of $23.6 billion).  This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105

4. Tax on Innovator Drug Companies ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980

5. Blue Cross/Blue Shield Tax Hike ($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004

6. Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399

7. Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959

8. HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959

9. Employer Reporting of Insurance on W-2 (Min$/Jan 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957

Taxes that take effect in 2013:

10. Surtax on Investment Income ($123 billion/Jan. 2013):  Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single).  This would result in the following top tax rates on investment income: Bill: Reconciliation Act; Page: 87-93

Capital Gains

Dividends

Other*

2012

15%

15%

35%

2013+

23.8%

43.4%

43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens.

11. Hike in Medicare Payroll Tax ($86.8 bil/Jan 2013): Current law and changes:

First $200,000
($250,000 Married)
Employer/Employee

All Remaining Wages
Employer/Employee

Current Law

1.45%/1.45%
2.9% self-employed

1.45%/1.45%
2.9% self-employed

Obamacare Tax Hike

1.45%/1.45%
2.9% self-employed

1.45%/2.35%
3.8% self-employed

Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93

12. Tax on Medical Device Manufacturers ($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

13. Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI ($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995

14. Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited).  Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs educationBill: PPACA; Page: 2,388-2,389

15. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D ($4.5 bil/Jan 2013) Bill: PPACA; Page: 1,994

16. $500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 bil/Jan 2013). Bill: PPACA; Page: 1,995-2,000

Taxes that take effect in 2014:

17. Individual Mandate Excise Tax (Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following

1 Adult

2 Adults

3+ Adults

2014

1% AGI/$95

1% AGI/$190

1% AGI/$285

2015

2% AGI/$325

2% AGI/$650

2% AGI/$975

2016 +

2.5% AGI/$695

2.5% AGI/$1390

2.5% AGI/$2085

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337

18. Employer Mandate Tax (Jan 2014):  If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees.  Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

Combined score of individual and employer mandate tax penalty: $65 billion/10 years

19. Tax on Health Insurers ($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year.  Phases in gradually until 2018.  Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993

Taxes that take effect in 2018:

20. Excise Tax on Comprehensive Health Insurance Plans ($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family).  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions.  CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956

Romney Receives Two Million Dollars In Contributions Off Court Ruling:

via The Hill

Mitt Romney’s campaign has raised $2 million off of Thursday’s Supreme Court ruling on the healthcare law, an official said.
Romney’s staff began the fundraising drive in reaction to the Supreme Court’s decision to uphold President Obama’s healthcare reform law, telling supporters in an email “the stakes couldn’t be higher” in November.

“Today, the Supreme Court upheld Obamacare. But regardless of what the Court said about the constitutionality of the law, Obamacare is bad medicine, it is bad policy, and when I’m President, the bad news of Obamacare will be over,” Romney wrote in the email.

Communist Party USA: Re-Electing Obama Is “Absolutely Essential”

Naturally.

via: CFP

A writer for the Communist Party USA says that “…re-electing Obama is absolutely essential,” and warns that “divisions among Democrats and a potential wave of bad economic news can combine to threaten President Obama’s reelection.”

Marxist John Case, who writes for various CPUSA publications, has written a piece, “The danger of a Romney election,” for the party publication People’s World, which warns that “Re-electing Obama is not sufficient to bring economic recovery or even relief to our people. Only a different class configuration in political power can do necessary minimum reforms to give us a chance. But re-electing Obama is absolutely essential. Now is not the time for hand washing the complexities and tactics away—or failing to triage the most critical questions from those that are less critical. We cannot win everything at once!”

‘Obama Truth Team’ Orders Website Shut Down

How progressive.

via: CFP

A political website that contained stinging criticism of the Obama administration and its handling of the Fast and Furious scandal was ordered to be shut down by the Obama campaign’s ‘Truth Team’, according to private investigator Douglas Hagmann, who was told by ISP GoDaddy his site contained information that was “maliciously harmful to individuals in the government.”

Hagmann, CEO of Hagmann Investigative Services, Inc., a private investigative agency serving a roster of Fortune 500 clients, was given 48 hours by GoDaddy to find a new home for his website before it was deleted.

Hagmann was told the reason for the shut down was because the website featured “morally objectionable” material. After GoDaddy refused to identify the complainant, only saying that it was not “any official government agency,” further investigation by Hagmann revealed that the order came from a group tied to Obama campaign headquarters.

Judge Napolitano Takes Issue With Obama’s Lawlessness