Tuesday, February 23, 2010

ATR: The Individual Mandate Excise Tax is a Tax

/PRNewswire/ -- A close reading of President Obama's healthcare plan finds several terms to describe the tax Americans will pay if they choose not to purchase qualifying health insurance. These terms include "payment," "assessment," and "individual responsibility."

-- This same tax has also variously been 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
would be assigned to any uninsured American (including those making
less than $250,000 per year), it's a pretty apparent violation of the
President's promise not to raise "any form" of taxes on working
-- The evidence that this tax on the uninsured is in fact a tax comes
from a thorough reading of the Senate healthcare bill's uninsurance
tax section (which the Obama plan specifically says it is starting
-- Page 322 of the Senate bill (the "Patient Protection and Affordable
Care Act") 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 on page 336 of
the bill references Chapter 68 of the IRC. On page 337 of the bill, a
new Chapter 48 is added to Subtitle D of the Code (Miscellaneous
Excise Taxes) in order to create the uninsurance tax. Page 341 of the
bill continues to reference various parts of the Code that need to be
amended in order to cover this new tax.
-- Anyone reading this precise legislative language can see how this tax
would be collected. An uninsured individual would add the excise tax
to their regular income tax burden on the 1040 Form every April. It
is much like other excise taxes collected on the 1040 (early IRA
withdrawal tax, for example).

Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases.

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