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18 Aug 2011
This week the
When Republicans first proposed that the provision in Obama Care that tells people they will have to pay higher taxes if they do not buy health insurance is unconstitutional I dismissed their ranting because there are hundreds of items in the tax code where if we don’t support congress’ pet projects we don’t get the most favorable tax rate. In my mind the only difference between the $300 extra you have to pay because you didn’t buy health insurance and the $3000 you didn’t get because you didn’t upgrade to a new air conditioning unit was just how the congress decided to “sell” their product of the day. Logically, they are equivalent. Spend your money how congress wants you to spend your money and your net tax bill is less than the person who doesn’t follow congress’ desire. The only difference is in one case congress is this loving body pretending to support and reward you with a gift of lower taxes and in the other case they are an oppressive authority figure dictating what you are going to do by threatening to punishing you by taking away more of your hard earned money. So for me the attempt to challenge Obama Care base on the constitutionality of the mandate was a waste of time and I wish the Republicans would have stuck to intelligent arguments on why it should be repealed. Those reasons are because the new healthcare law makes healthcare much more expensive in this country and it doesn’t do anything to improve quality or availability. But this just highlights a characteristic Republican flaw; they are more interested in “winning” for themselves than they are in improving the country. You can see this manifested in their creation of Ohio Ballot Issue 3. If Issue 3 passes and it does what the promoters say they intend for it to do Ohioans will have locked in forever the healthcare system that was in place prior to March 19, 2010. Now I believe Obama care is worse for the country than what came before it – but do we really want to lock in the previous healthcare rules forever? I mean there really was a legitimate reason to address the problem prior to Obama care. Just because the implemented solution didn’t address any of the problems doesn’t mean we should abandon future attempts.
Back to the main theme – the Republican challenge to the mandate in the Healthcare bill if successful should lead to the elimination of many tax deductions. Any part of the tax code that forces people into buying a commercial product in order to get the same lower tax rate as other people would also have to be held unconstitutional. Let’s look at two people with jobs. Suppose both of those people pay income tax at a rate of 20%. Suppose all their salary and benefits are the same except; the first person works for a company that pays $1000 a month so that the first person gets health insurance and the second person works for a company that pays that $1000 a month to the second person as salary. In this simplified example both people are getting paid the same amount but the second person will pay $240 more in income taxes than the first person. The reason the second person pays more …. because the second person did not work for a company that obeyed congress’s mandate to spend that $1200 on health insurance. Remember this is a simplified example (because social security taxes etc make paying the money in salary even more expensive) but it is a real example of today’s tax code that we have all accepted as constitutional. But maybe that acceptance has been misguided. Any logical person will see that the Obamacare mandate and the current deduction for employer paid health insurance are part and parcel the same thing. If you don’t spend your money the way congress dictates then you pay higher taxes. If the Supreme Court rules with the 11th Circuit Court we can only hope this will mandate what Congress should be doing without this prompt - Simplify the Income Tax code by eliminating deductions.
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