Reason Foundation

http://www.reason.org
http://www.reason.org/news/show/obamas-health-care-tax-on-the

Reason Foundation

Obama's Health Care Tax on the Poor Is Just Called Something Else

Anthony Randazzo
September 21, 2009, 12:01pm

During the campaign in 2008, President Obama made his tax message as clear as it could be: he wanted to tax the wealthy, and help the poor. He promised over and over that taxes on those making less than $250,000 would not go up. So why has the president proposed a health care tax on the poor?

A frequent line by candidate Obama in his stump speeches during the election went something like this:

"Let me be absolutely clear. If you are a family making less than $250,000 a year, you will not see your taxes go up."

Despite this promise, we've already had the federal tax hike on cigarettes to fund children's health care (S-CHIP), an excise tax that impacts the poor profoundly more than the wealthy because of the inverse relationship between smoking and income.

Next came the tariff levied by Protectionist Obama on inexpensive Chinese tires, a tax that will only increase the cost of tires (or at the very least, keep the cost from decreasing) for those with limited incomes. The whole point of Chinese tires in America was that they were being produced with less cost and were less expensive. The tariff isn't going to help rubber workers in the long-run, it's just adding to the tax burden of those under $250,000 while maligning the use of resources in our economy.

And now we come to the health care mandate. As the president laid out in his address to Congress and the American people, he wants health insurance to be mandated like auto insurance. If you don't get insurance, then you get fined. That is a tax on Americans. It is the government taking money. But now the president is trying to dance away around the tax in the mandate by trying to redefine the idea of a tax. The Wall Street Journal covered this in an editoral on Sunday:

Appearing on ABC's "This Week," Mr. Obama was asked by host George Stephanopoulos about the "individual mandate." Under Max Baucus's Senate bill that Mr. Obama supports, everyone would be required to buy health insurance or else pay a penalty as high as $3,800 a year. Mr. Stephanopoulos posed the obvious question about this kind of coercion when "the government is forcing people to spend money, fining you if you don't [buy insurance]. . . . How is that not a tax?"

"Well, hold on a second, George," Mr. Obama replied. "Here's what's happening. You and I are both paying $900, on average—our families—in higher premiums because of uncompensated care. Now what I've said is that if you can't afford health insurance, you certainly shouldn't be punished for that. That's just piling on. If, on the other hand, we're giving tax credits, we've set up an exchange, you are now part of a big pool, we've driven down the costs, we've done everything we can and you actually can afford health insurance, but you've just decided, you know what, I want to take my chances.  And then you get hit by a bus and you and I have to pay for the emergency room care, that's . . ."

"That may be," Mr. Stephanopoulos responded, "but it's still a tax increase." (In fact, uncompensated care accounts for about only 2.2% of national health spending today, but that's another subject.)

Mr. Obama: "No. That's not true, George. The—for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase. What it's saying is, is that we're not going to have other people carrying your burdens for you anymore . . ." In other words, like parents talking to their children, this levy—don't call it a tax—is for your own good.

As someone who makes under $250,000 a year, I would like to have the option of not having health insurance without fearing a government penalty—or perhaps government discipline is a better way to say it. After all, our parents disciplined us as children as a way of teaching a lesson. And since the president clearly believes he knows best (paternalism), the lesson he wants to teach is: a great way to extend the authority and power of government is to force people into an arbitrary notion of responsibility.

Do I have to have dental insurance, for instance? Why not just choose to brush my teeth twice a day, and go to a dentist that charges between $50 and $100 for an annual cleaning. That's personal responsibility. And if I break a tooth and have a $2,000 bill, it's on me to cover that. I made the choice. I govern my life. I have the incentive to avoid breaking my teeth because of the cost. The government doesn't have to step into that fray, it just chooses to in order to wield more progressive power and control over society and our behavior.


Anthony Randazzo is Director of Economic Research


Print This