Obamacare Taxes and Why They May Be Problematic

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In essence, the employer mandate and individual mandate are taxes as well. Those individuals who do purchase Obamacare-compliant policies will be fined a tax penalty amounting to $95 or 1 percent of income, whichever is greater, in 2014 — an amount that will increase through 2016, when the penalty will stabilize at $695 or 2.5 percent of income. Meanwhile, the Affordable Care Act requires businesses with 50 or more full-time-equivalent employees to provide those workers with a minimum level of health insurance coverage or face tax penalties of as much as $3,000 per full-time employee, excluding the first 30, beginning in 2015. Although a Monday ruling from the Department of the Treasury postponed by another year the mandate for those companies with the equivalent of 50 to 99 full-time employees. In the most basic sense, the healthcare reform is a tax because Obamacare was upheld in 2012 by the Supreme Court as a proper exercise of the federal government’s power to tax.

As early as 2009, before the Affordable Care Act was signed into law, former Republican Senator Jon Kyl of Arizona told current Speaker of the House John Boehner, a Republican from Ohio, that, “The whole concept of the bill, with its government mandates, its taxes, its spending, and all of the other features of it, are what make it unacceptable.” Nearly five years later, in a post to the Republican party’s webpage, the GOP was once again making the argument that the new taxes were unacceptable. Under the heading, “As ObamaCare Rings In The New Year, Americans Will Pay More in Taxes,” several articles were cited; Rachael Bade of Politico wrote at the beginning of January that, “Obamacare’s $8 billion health insurance tax will increase healthcare premiums for health insurance consumers,” while similarly a letter to Senator Tom Coburn from the Joint Committee on Taxation noted that the tax “increases costs for affected health insurance providers and may be passed on to consumers in the form of higher prices.”

Even worse, Forbes contributor and health care expert Avik Roy argued in a February 5 article that, “Obamacare’s $1 trillion in tax increases, which will discourage work and depress economic growth.” That conclusion that was largely based on the Congressional Budget Office’s Budget and Economic Outlook for 2014 to 2024, which included an updated analysis of the “labor market effects of the Affordable Care Act.” The nonpartisan agency found the reduction in the total number of hours worked by the American labor force due to the Affordable Care Act would amount to 2.5 million by 2017.

Yet, the Affordable Care Act — which will enable many Americans to purchase more affordable insurance policies — will influence the “amount of labor that some workers choose to supply,” not the availability of jobs. The CBO’s report specifically stated that the impact of the healthcare reform on employment will not be felt as an “increase in unemployment” or “underemployment.”

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