Mandate not the largest tax increase by a mile

Al Cardenas said the requirement of Americans to acquire insurance amounts to "one of the largest tax increases" ever. Huh? Did he read the decision? Image: Gage Skidmore/Flickr/CC BY-SA

The conservative media has been in an absolute panic since Thursday’s Supreme Court decision to uphold the individual mandate of the Affordable Care Act. The immediate buzz word, or “buzz phrase,” if you will, that they all seemed to have glommed onto is that the individual mandate amounts to “the largest tax increase ever.” It sounds good, and gets people riled up, but there is not a bit of truth in it.

Largest tax increase?

In the words of American Conservative Union president Al Cardenas on Thursday:

“Today’s Supreme Court decision on the health care bill was a win for the liberals and a loss for American taxpayers. The Supreme Court called this mandatory insurance a tax, so let’s be clear: it’s one of the largest tax increases in our country’s history. We have only one course available to prevent this disastrous mandate from taking place: big wins in November in Congress and the White House.”

Rush Limbaugh even upped the ante. He said that if the Affordable Care Act is implemented it will amount to “nothing more than the largest tax increase in the history of the world.” And that is even after adjusting for inflation, I suppose.

Insurance is not the tax

But the simple fact is, the requirement for Americans to acquire insurance itself is not the tax. The tax is the penalty on those who decline to acquire it.

From CBS:

“The court ruled that the federal government does have the power to require all Americans to acquire insurance if the ‘fine’ imposed on those who don’t is considered a tax.”

Nobody really knows the cost of the tax will be, since nobody knows how many will chose to not get health insurance. Those people who do opt out will be the only ones who have to worry about paying the tax, so it will not even affect most people. Those that are affected will have made that choice.

This tax will also not affect the poor who can’t afford insurance. A family of four making less then $26,000 a year, say, will not be required to carry insurance, and will therefore be exempted from the tax. Those poor who can’t afford healthcare are, after all, the people the law is really about protecting.

Tax costs of ACA

Which is not to say that the Affordable Care Act won’t have an impact on taxpayers. The non-partisan federal Joint Committee on Taxation compiled a detailed report on the tax impact of the Affordable Care Act for Congress. Most of that burden will be carried by higher-earning Americans, and won’t affect those who can’t afford health insurance.

Starting last year, drug makers and importers were required to pay a new fee. Starting in 2013, Medicare payroll taxes will increase by 0.9 percent for those earning more than $200,000 a year. Also starting 2013, an additional tax will be added for makers and importers of some medical devices. Starting 2014, health insurance providers will start being charged a yearly fee. In 2018, those with expensive so-called Cadillac health plans will have to pay a 40 percent excise tax.

Time to grow up

The idea that the Affordable Care Act amounts to the greatest tax hike ever is yet more absurd nonsense from the right. It is designed to confuse and to scare the very people minimized by their greedy ideology into supporting them. Their vehement reaction is about money, purely and simply; remaining as rich as possible at the expense of healthcare for the poor.

The other civilized nations of the world have nationalized systems to provide all citizens with access to health care. It’s time for us to grow up as well and start behaving responsibly.