President Obama Offers a Taxing Definition

By Gorman Gorman

Sep 21, 2009 9:44am

President Obama and George Stephanopoulos got into a somewhat contentious back and forth yesterday about whether or not the penalty for those who do not abide by the individual mandate in the health care reform bill offered by Sen. Max Baucus, D-Mont., constitutes a tax.

You can watch their exchange HERE.

"Under this mandate, the government is forcing people to spend money, fining you if you don’t," Stephanopoulos said. "How is that not a tax?"

"Well, hold on a second, George," said the president. "Here — 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, but it's still a tax increase," said Stephanopoulos.

"No," said the president. "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 than the fact that right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase. People say to themselves, that is a fair way to make sure that if you hit my car, that I'm not covering all the costs."

Said Stephanopoulos: "But it may be fair, it may be good public policy…"

"No, but — but, George, you — you can't just make up that language and decide that that's called a tax increase," said the president. "What…if I say that right now your premiums are going to be going up by 5 or 8 or 10 percent next year and you say well, that's not a tax increase; but, on the other hand, if I say that I don't want to have to pay for you not carrying coverage even after I give you tax credits that make it affordable, then…"

Stephanopoulos cited Merriam Webster's Dictionary definition. "Tax — 'a charge, usually of money, imposed by authority on persons or property for public purposes.'"

"George, the fact that you looked up Merriam's Dictionary, the definition of tax increase, indicates to me that you're stretching a little bit right now," said the president. "Otherwise, you wouldn't have gone to the dictionary to check on the definition….I absolutely reject that notion" that it's a tax increase.

Hmmm.

Well maybe someone should tell that to the author of the bill.

Because, as Politico's Chris Frates points out, it's all right there on page 29 of the bill: "Excise Tax. The consequence for not maintaining insurance would be an excise tax."

To be more specific, if a taxpayer‘s modified adjusted gross income is between 100-300 percent of the federal poverty level, "the excise tax for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or an individual claimed as a dependent) is $750 per year. However, the maximum penalty for the taxpayer unit is $1,500."

If a taxpayer‘s modified adjusted gross income is above 300 percent of federal poverty level "the penalty for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or as an individual claimed as a dependent) is $950 year" — with a maximum penalty of $3,800.

"Exemptions from the excise tax will be made for individuals where the full premium of the lowest cost option available to them (net of subsidies and employer contribution, if any) exceeds ten percent" of their adjusted gross income.

So…it's not a tax?

- jpt

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