Monday, July 2, 2012

Obamacare's "Taxes" Are Really Fines

After three years of telling us the Obamacare's fees "were not a tax" now we're told "actually, it was totally a tax all along."

Remember this?

I sure as heck do!  Now that this is what the President has to accept for his law to stay in effect, now it's a tax. I mean of course! It was always a tax! Pay no attention to the video evidence!

I am here to tell you that no, the Individual Mandate IS NOT A TAX. It is a fine. A fine for failure to comply with a government mandate, (not so) cleverly disguised as a tax. Here's how it works:

Your taxes are raised by X amount above the baseline across the board. All citizens. However, this tax is avoided by purchasing health insurance. Of course, nothing else is applicable to this "tax." There are no other taxes in this country that is based on inactivity. All taxes are based on either income, property or activity. Income taxes are paid on income earned (duh).  Property taxes are paid by all that own land (whether or not you have house on it). The rest of the taxes available are based on activities. There are taxes on purchases, like the tax on a pack of cigarettes, the tax on a gallon of gas, or the sales tax on the purchase of a product.

There are also fines. Fines are paid on inactivity. For example, you pay a fine if a police officer observes you failing to obey a traffic signal.  (For those of you from Palm Beach County, FL, that's "not stopping a stop sign" or "running a red light.")  There are fines for failure to have a valid driver's license while driving on public roads. There are fines for failure to legally register your car. There are fines for failure to register your firearm in many states. (There are not, however, fines for failure to drive on public streets or failure to buy a car or failure to buy a gun.)
There are also tax credits and deductions. There is a tax credit for every dependent child living in your home. There is also a tax deduction one can claim on their tax returns for interest paid on your house. Here, let me explain this in numbers:

If a couple has a household income of $50,000 and one dependent child and are in the 25% tax bracket based on that income, their baseline Federal tax is $12,500 a year, before all deductions. That is the baseline. Now if we say they paid (just picking a nice, round number here, friends) $2000 in interest in their mortgage.  So they get a $2000 tax deduction. That means their 25% tax rate is now assessed not off $50,000 in income but now off $48,000. So their tax burden has dropped to $12,000. They also have a tax credit of $1000 because of their dependent child. Their tax burden now drops to $11,000.  However, even without their mortage deduction and child tax credit, at no point are their taxes rising above the $12,500 per year baseline.

However, with Obamacare there is a new tax imposed on the family.  For three people they are paying a tax of $695 a year (per person) for  total of $2085.00 additional tax burden. This raises their tax burden to $14,585 (before the mortgage deduction and child tax credit) or $13,850 (including the mortgage deduction and child tax credit). However, if they comply with the the Obamacare mandate, they get a tax credit back of $2085.00. Translation, there tax burden goes back down to $12,500 (before the mortgage deduction and child tax credit) or $11,000 (including the mortgage deduction and child tax credit).

In other words: It's a fine!  If you do not get insurance you pay $695.00 per person for failure to comply. You avoid the fine by getting insurance. Just like you pay a fine of say $100 for failure to stop at a red light but you avoid that fine by not running the red light. That is a fine, my friends.

Don't believe the lies and hype. No matter how many times the Drive-By Media and the Democrat Party pull out the "it's a tax" line, remember, it's a fine.


  1. I don't understand.... The President has called this a penalty. The GOP has called this a tax. And now you are calling it a fine. What difference does it all make? You should purchase health insurance if you can afford it. If you don't have the money, you will get subsidized to purchase it on the exchange. No more free-riding on those with insurance.

  2. One, a penalty and a fine are the same thing. Two, I don't have to agree with the GOP because I registered with the party. Three, the Constitution does not give the government the right to mandate a purchase. Calling it a tax is an end run around this. Four, the "free riders" you speak of largely consist of people who have consciously chosen to self-insure (that's pay cash) because they are young and healthy.

  3. Obama logic: People who choose to pay their own way out of pocket rather than buy insurance because their personal cost-benefit analysis decided that self-insuring was the least expensive option = "freeloaders." Illegal immigrants sponging off the system = "dreamers."


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