Healthcare Reform: The Seinfeld Tax – A Tax On Nothing????

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Over at Balkinization, there is a piece refuting the charge that you’ll go to jail if you don’t have or buy health insurance. If this article is correct, you won’t. But I find it interesting to note what will happen – you get taxed:

If you are not exempted [exemptions are listed in the article], and you don’t purchase health insurance, you just pay a higher tax. You don’t go to jail. …if you refuse to pay your taxes, the government will fine you in the same way that it does whenever you refuse to pay your taxes. Prison is also a possibility for the most determined tax cheats,….

(Uh oh… more ellipses. I wonder if Patterico will be pissed?)

So if you have the following choices: If you are not exempted, you must buy qualifying health insurance. If you’d rather not, for whatever reasons, you can pay a higher tax. If you pay your taxes, nobody will come after you…

You might object: the individual mandate tax is different than general revenues going to defense spending. This is a tax directed at people if they don’t do something….

Hold on a second. Tax??? Isn’t that usually called a fine

So if you don’t buy health insurance, you are increasing costs for other people. The federal government is taxing you to recoup some of those costs. An analogy would be taxes on alcohol or tobacco, although these taxes are usually worked into the retail price of the goods so that people don’t even have the opportunity to refuse to pay them…

Poor analogy. Though I’m not a fan of these type of “sin” taxes, in the case of alcohol and tobacco, you’re at least paying a tax on an actual product, something you can hold, drink and smoke, something you exchange cash for.

Another example would be taxes on an enterprise that is creating additional costs to the environment through pollution; the government taxes you if you don’t purchase and install anti-pollution equipment. If people don’t purchase the pollution-control equipment and won’t pay the tax, the government will fine them too.

Uh… Wait. Does that tax even exist? I’m aware of tax breaks given for environmental improvements, but not of a specific tax bracket in which polluters must pay extra taxes for not installing new equipment.

If you don’t want to pay your taxes, the government will punish you, not because you object to buying health insurance, but because the government doesn’t like it whenever you don’t pay your taxes. It also doesn’t like it when people don’t pay their taxes because they object to the government’s defense spending.

Another bad example. Defense spending is a part of the general fund. It is not paid for via a separate tax. It’s paid for from you income taxes, or excise taxes, or other forms of revenue collection.

This is the same old government game we’ve been playing out here in the California legislature, with disastrous results. Year after year, as the budget deadline draws near, they realize they need more revenue to pay for the government they expanded, but we can’t call it a tax, because then the voters would have to vote on it, which they likely won’t, and they might get voted out of office. So instead of trying to pass new taxes, they create new fines, or raise fees. Somehow, by changing the name, it makes all the difference. In this new game, the term “tax” is being used to conceal the true nature of the deal. No one signing on to this deal wants to be accused of setting up a system where poor people are punished by a fine, so they change the name to a tax instead (as if that makes it any better).  The government can collect a tax on either a product that generates revenue, or on income you receive from an employer or from operating a business. But how do you put a tax on a non-transaction. You can’t put a tax on nothing. Something has to be changing hands. This is not a tax, it’s a fine.

Note: I am not a tax lawyer, accountant, CPA. or CFA and welcome any valid corrections from the experts. Yes, that excludes politicians.

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