A Tax By Any Other Name Still Punishes the Poor

Let’s see, BO, you mock George Stephanopoulos for looking up “tax” in Webster’s dictionary, but what are you going to say about Max Baucus’ bill section on the excise tax? Baucus writes, “The consequences for not maintaining insurance would be an excise tax” (29).

The bill, in the section entitled “Excise Tax,” goes on to explain it more fully:

Excise Tax.
 The consequence for not maintaining insurance would be an excise tax.  If a taxpayer’s MAGI is between 100-300 percent of FPL, 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 MAGI is above 300 percent of FPL 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.  However, the maximum penalty amount a family above 300 percent of FPL would pay is $3,800.
 The excise tax would apply for any period for which the individual is not covered by a health insurance plan with the minimum required benefit but would be prorated for partial years of noncompliance. The excise tax would be assessed through the tax code and applied as an additional amount of Federal tax owed. (29)

Granted, the high end of $3,800 per year cap has been lowered, and there are numerous amendments in the offing (the reason I’m not reading this bill, though it’s far better written than HR 3200).  But a tax is a tax is a tax. They’ll probably have to change the language to fool the fools who want to believe anything that BO says, but is it really so ridiculous and laughable to think of an excise tax that is assessed through the tax code and applied as an additional amount of Federal tax owed as a . . . well, tax?

Not only is this a bad idea, but it’s been proven to be a bad idea in many states, including my own (Massachusetts, I wrote a bit about it in 2006).  One of the major problems with it concerns the ridiculously low “poverty level” stipulated by the feds.  Their 2009 numbers are $10,830 for an individual and $22,050 for a family of four.  Stop and think about that for a second.  This is a blanket amount that applies to the 48 contiguous states (see link for Alaska and Hawaii).  Again, this makes no sense.  We all know that the cost of living in places like California, New York, New England is massively higher than that in, say, Birmingham, AL or Ogden, UT (and no, the salaries are not substantially different for low-earners).  You might still find an apartment in one of the latter two states for $500.00 a month, but no way are you finding an apartment for under $1,000 in Massachusetts, not unless you go into “government housing” (i.e. the projects where BO’s aunt lives, that links to the Boston Globe, so of course doesn’t mention that she is here illegally yet still living off the tax payers’ legal income).

So say you make 300% of this poverty level, as an individual:  you are rolling in the dough, raking in a massive annual income (gross) of $32,490.  By the time all of your already existing taxes and payouts (state and federal taxes, social security, medicare) are deducted, you may be bringing home a whopping $300 to $400 or so a week (net).  From this you get the “choice” of being forced to buy insurance you don’t need (perhaps you are healthy and want only catastrophic insurance, which costs less but still meets your needs if something horrible happens to you like a car accident or terminal illness) or to pay an excise tax for not having the state-approved plan.

Sorry, but I cannot ever stand behind something that taxes those making $20k per year.  These are people who cannot afford to pay for health insurance, the people we are purportedly trying to help, yet this punishes them for being poor . . . but not poor enough.

___________

Thanks to Conservative Black Woman who posted President Obama’s Orwellian Double Speak Has Reached An Epic Level and where I first read about the excise tax in Baucus’ bill.  As is often the case in the blogosphere, she in turn credits Right Klik who credits The Moderate Voice.

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2 thoughts on “A Tax By Any Other Name Still Punishes the Poor

  1. During the primaries and presidential campaign we heard, repeatedly, that there would be no new taxes on the middle class or low income earners. A whopping 95% of Americans wouldn't see a tax increase. Anyone who fell for that line deserves to pay my federal tax increases.

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