Now that it is becoming clear that the establishment House Republicans are about to capitulate to the Senate Democrats and Obama Progressives, it is clear that, short of Republicans taking the Senate in 2014 and the White House in 2016, Obamacare is set to sink into the flesh of the American entitlement system not unlike a bear’s claws sink into the flesh of its prey. Regardless of whether or not the federal healthcare exchange website functions adequately or not (get used to it, it’s government inferiority at work), the bureaucracy has just expanded and your wallets are about to do the opposite.
One of the things that people are going to have to come to understand is how the Internal Revenue Service – yes, the same Internal Revenue Service currently under investigation for targeting Conservative political groups – will be assessing the penalties (read: enforcing Obamacare) on those who choose not to “participate.” The fact of the matter is that it is both less ominous, yet more disturbing, than people think.
The penalties levied under the Affordable Care Act, under the usually heavy hand of the IRS, is not so much under the ACA. In fact, the pathway for extracting the Obamacare penalty from non-participants is exclusive to the garnishment of any federal tax refunds due. If one chooses not to acquire qualifying health insurance, the IRS will withhold the amount of the penalty that must be paid from any federal tax return refund that is owed an individual in violation of the statute.
According to BusinessInsider.com:
The IRS will not have the power to charge you criminally or seize your assets if you refuse to pay. The IRS will only have the ability to sue you. And the most the IRS can collect from you if it wins the suit is 2 times the amount you owe. So if you want to thumb your nose at the penalty-tax, the IRS won’t be able to do as much to you as they could if you refused to pay, say, income tax.
So, unlike when an individual fails to pay their federal income taxes, there won’t be a cadre of black uniformed federal agents armed with fully-automatic weapons kicking in your door in the middle of the night. You won’t be “frog-marched” out of your house in irons, past your disenchanted neighbors, to face the swift righteousness of redistributive social justice (I am being sarcastic, but less so than I would have been just a few years back).
But one question that eludes the thoughts of most people where this matter is concerned is this. What happens if you don’t “participate” in Obamacare but you aren’t due any federal tax refund? What if you are one of the 47 percent who does not pay federal income tax? What if you are über-wealthy and can afford a wizard tax attorney who can figure out how you can “zero out” on your federal taxes each year?
Well, the short answer is this. If you don’t pay federal income tax, technically, you don’t have to pay the fines under the Affordable Care Act. If you are one of the hard-working Americans who has federal taxes withheld from your paycheck – oh, you know, like Middle-Class, blue-collar and union workers not covered by the Executive Branch union carve-outs of the law – you will have to pay the penalty out of your tax refunds. If you are one of the 47 percent of the American public who doesn’t pay federal income taxes, you get to “skate” the Obamacare penalty. Ditto for the “One Percenters.”
One has to wonder whether H&R Block is going to be flooded with new clients trying to figure out how to pay their federal income taxes to the penny throughout the year so that they “zero out.”
And let’s be honesty, the IRS is not going to come after every person who “skates” the $95 dollar (or 1 percent of earnings) penalty being assessed in 2014, even if they did seek to hire upwards of 16,000 new IRS agents since the passage of this freedom-crushing law.
So, when one comes to understand this very stark reality, the obvious question is this. If the indestructible demographic (the 21 to 32 year-old demo) doesn’t sign-up for the Obamacare exchanges in droves – and droves upwards of 80% of their demographic, and 47 percent of the country doesn’t pay federal income taxes, who actually pays for the expanded coverage mandated under the Affordable Care Act? Who is on the hook for Obamacare?
The answer – again – is the Middle-Class, blue-collar and union workers not covered by the Executive Branch union carve-outs of the law…and new taxes on everyone. Again, BusinessInsider.com reports:
Here are some of the new taxes you’re going to have to pay to pay for Obamacare:
▪ A 3.8% surtax on “investment income”( dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc.) when your adjusted gross income is more than $200,000, $250,000 for joint-filers. What is “investment income?” (WSJ)
▪ A 0.9% surtax on Medicare taxes for those making $200,000 or more, $250,000 joint. (WSJ)
▪ Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. (ATR.org)
▪ The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. (ATR.org)
▪ The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%. (ATR.org)
▪ A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010. (ATR.org)
▪ A 40% tax on “Cadillac Health Care Plans” starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. (ATR.org)
▪ A”Medicine Cabinet Tax” that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. (ATR.org)
▪ A “penalty” tax for those who don’t buy health insurance.
▪ A 2.3% excise tax on medical devices costing more than $100. (Breitbart.com)
So those are some of the new taxes you’ll be paying that will help pay for Obamacare…
Note that these taxes are both “progressive” (aimed at rich people) and “regressive” (aimed at the middle class and poor people).
The cost of this program will not be affordable for the individuals – almost every story but for those who get taxpayer-funded subsidies is one of tripled premiums and deductibles, and it won’t be affordable for the country, especially when the bureaucrats and elitist political class put the price tag of the whole Obamacare ball of infected earwax at approximately $2 trillion dollars.
Now, President Obama is quoted as having said, in an interview with the Spanish-Speaking television network Univision, that:
Once [the budget impasse is rectified], you know, the day after – I’m going to be pushing to say, call a vote on immigration reform…And if I have to join with other advocates and continue to speak out on that, and keep pushing, I’m going to do so because I think it’s really important for the country. And now is the time to do it.
And as the “indestructible” demographic (21-32 years of age) fails to sign-up for the Obamacare exchanges, pro-amnesty Progressives will begin insisting that illegal immigrants (I’m sorry, I mean undocumented uninvited guests) be added to those eligible for Obamacare. Understanding that the 47 percent of those who do not pay federal income tax cannot be fined, and that the One Percenters can affords to have their taxes “zero out,” how long will it be until Progressives scream “crisis” and demand massive, Middle-Class killing. economy destroying, Cloward-Piven-styled tax increases?
Who is John Galt?
Frank Salvato is the Executive Director for BasicsProject.org a non-partisan, research and education initiative focusing on Constitutional Literacy and the threats of Islamofascism and Progressivism. His writing has been recognized by the US House International Relations Committee and the Japan Center for Conflict Prevention. His organization, BasicsProject.org, partnered in producing the original national symposium series addressing the root causes of Islamist terrorism. He can be contacted at [email protected].