Call it a penalty, call it a tax. Call it a “penalty tax” as the Congressional Budget Office (CBO) has.
Call it what you will, we’ll just call it ‘devastating’.
Beltway Confidential reports:
President Obama’s health care law raises taxes by $1 trillion, according to a new report from the Congressional Budget Office.
The individual mandate — which the CBO calls a “penalty tax,” in apparent deference to Chief Justice John Roberts — will produce $55 billion in “penalty payments by uninsured individuals,” the CBO told House Speaker John Boehner, R-Ohio, in a Tuesday letter. Of course, the framers of the law didn’t design the mandate as a tax, and so it produces less revenue than any other provision in the bill.
The “additional hospital insurance tax” is the largest tax increase in Obamacare, projected to bring in $318 billion in new revenues. According to the 2010 report from the Journal of Accountancy, this tax hits “high-income tax payers” — individuals making over $125,000 a year or households making over $250,000 a year.
It may hit so-called high-income tax payers, but it will most certainly have an effect on lower-income families as well.
This from the Tax Policy Blog:
Though Obama vowed not to raise taxes on low-to-middle income Americans, various provisions will most certainly fall on lower income groups. For example, new annual taxes on health insurance providers, drug manufacturers, and the medical device industry will be passed on to all consumers in the form of higher prices and premiums. More direct are new taxes on high-cost “Cadillac” health plans, the tax on tanning services that is already in effect, and the individual mandate tax/penalty.
Regarding the tax/penalty for not purchasing health insurance, my analysis indicates that many low and middle-income households will experience tax increases of substantial magnitude. For example, starting in 2016, an uninsured family of four with income of $50,000 will owe $2,085—or 4.17 percent of income. As shown in the table above, the individual mandate represents a $55 billion tax increase over 10 years, and this is before it is fully phased in.
With high- and low-income earners alike having to worry about massive tax increases, the Obamatax should do wonders for the economy, particularly in the areas of spending and consumer confidence.
Here is a video reminder of Obama saying, “You don’t raise taxes in a recession”.