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In February 2009, President Obama delivered what Steve Benen rightly described as the largest two-year tax cut in American history. Nevertheless, the New York Times asked in the run-up to the 2010 midterms, "What if a president cut Americans' income taxes by $116 billion and nobody noticed?" What happened, of course, was the Democrats' drubbing that November.

Now Republicans are hoping to repeat history this fall, this time by pretending that the Affordable Care Act upheld by the Supreme Court Thursday is a "massive tax increase" on American families. As it turns out, the penalty for failing to obtain health insurance beginning in 2014 will impact four million people, or less than two percent of the U.S. population. To put that figure in context, 40 times as many Americans pay the mandated taxes for the very popular Social Security and Medicare programs.

As we learned during the recent debate over the extension of the payroll tax cut, 160 million Americans pay taxes to fund the Medicare and Social Security trusts for today and tomorrow's retirees. Since 1935, workers and their employers have each paid into the Social Security trust fund, a figure which next year will return to its 6.2 percent rate on the first $106,000 of income. In addition, employer and employee alike are on the hook for another 1.45 percent for Medicare, the insurance program for the elderly established in 1965. (If you have any lingering doubts that you must purchase these mandated public products for your old-age health care and retirement income, these prosecutions will disabuse you of that notion.)

In comparison, the Affordable Care Act's individual mandate to obtain workplace, government-provided or privately purchased insurance impacts just a small fraction of Americans. For starters, over 80 percent already have health insurance, compared to roughly 17 percent who do not. The Economic Policy Institute estimates that 59 percent of those under age 65 receive employer-sponsored insurance, while another 22 percent are covered by public programs including Medicaid and SCHIP. Of the 50 million people who are currently uninsured, about 20 million (including undocumented immigrants and those with religious objections or claiming economic hardship) are not covered or are otherwise exempt from the health insurance mandate. As a recent Urban Institute analysis concluded:

What may be surprising, however, is that if the ACA were in effect today, 94 percent of the total population (93 percent of the nonelderly population) or 250.3 million people out of 268.8 million nonelderly people--would not face a requirement to newly purchase insurance or pay a fine.
As Ryan Grim noted, that's because "98 percent of Americans would either be exempt from the mandate—because of employer coverage, public health insurance or low income—or given subsidies to comply." The Urban Institute estimated that 8.1 million Americans would have their insurance paid for by the expansion of Medicaid to 133 percent of the federal poverty level. Another 10.9 million people would receive subsidies to buy private insurance in the new state exchanges, while only 7.3 million (2 percent of the total U.S. population) would be required to purchase a health plan using their own resources alone. As for those Americans choosing to instead to pay the penalty of $695 or up to 2.5 percent of household income for failing to obtain insurance at all, the CBO estimated that number at 4 million. (That forecast is almost double the rate in Massachusetts, where only 48,000 in a state of 6.6 million people opted to pay the penalty rather than acquire health insurance under Mitt Romney's version of the individual mandate.)

But if far more Americans pay the Social Security and Medicare mandates, the number of direct beneficiaries of "Obamacare" is much lower. In 2011, over 55 million people received Social Security benefits. Of those, 44.7 million got old age and survivors insurance, with another 10 million receiving disability benefits. Forty-seven million people are enrolled in Medicare, with 8 million of them non-elderly, disabled recipients. In comparison, the Congressional Budget Office now forecasts that 30 million Americans will gain health insurance under the Affordable Care Act. (That figure understates the program's benefits, as the closing of the Medicare donut hole, ending lifetime benefit caps, mandatory coverage for a range of preventive care services and barring discrimination for pre-existing conditions is already helping millions more.)

In Thursday's ruling, Chief Justice John Roberts concluded that its taxing power under the Constitution gives Congress the authority to issue penalties for non-compliance with the Affordable Care Act. But as the data above show, those penalties hardly constitute a "massive tax hike" that "hits everybody, not just rich people." While is certainly true that new taxes, fees and penalties will generate roughly $500 billion in new revenue over the next decade, much of it will come from businesses and households earning over $250,000 a year. Nevertheless, Mitt Romney's sidekick Sen. Marco Rubio (R-FL) was quick to resurrect "the jack-booted thugs" of the Republican Party's 1990s war on the IRS:

Romney "supported it on the state level. Which means if you didn't like it in Massachusetts, you could move to another state," Rubio said on Bloomberg Television. "What are people supposed to do? Leave the United States now because of Barack Obama's brilliant idea to stick the IRS on millions of people? More importantly, the state of Massachusetts doesn't have the IRS. The IRS will follow you. Do people understand what this means?"
What this means is that Marco Rubio is both melodramatic and factually challenged. (As Bloomberg BNA noted, "Unlike most other types of tax debts, IRS cannot file a tax lien against individuals who do not comply with the health insurance mandate and can only collect the money by withholding it from tax refunds or Social Security checks.") Going off script, he's also suggesting that Mitt Romney raised taxes on and sent his department of revenue after Massachusetts residents to pay for his signature 2006 health care law.

In any event, Americans can and will argue about the distinction between a literal tax levied and a penalty imposed under Congress' power to tax. But Republican hysteria about "biggest tax increase ever in the history of our country" notwithstanding, there should no disagreement about the massive tax hike that isn't.

Originally posted to Jon Perr on Fri Jun 29, 2012 at 01:43 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Excellent, as always (7+ / 0-)

    Still my favorite writer at DKos.  T&R.

    "People should not be afraid of their government; governments should be afraid of their people." --V

    by MikeTheLiberal on Fri Jun 29, 2012 at 01:46:51 PM PDT

  •  somewhat asdf, (1+ / 0-)
    Recommended by:

    can you tell me what number of employees an employer has to have to be mandated to provide health insurance as a party of employment?

    “I freed a thousand slaves. I could have freed a thousand more if only they knew they were slaves.” - Harriet Tubman

    by Publius2008 on Fri Jun 29, 2012 at 02:02:18 PM PDT

    •  Never mind, google was my friend: (9+ / 0-)
      Offer a minimum level of health insurance to their employees after a 90-day waiting period, starting in 2014. This only applies to businesses with at least 50 employees who work "full-time," meaning at least 30 hours a week, according to Convenience Store News, which covers the retail industry. The health plans offered must comply with existing reforms, including coverage of dependents up to age 26.

      If a business chooses not to offer employee health plans, the Affordable Care Act's employer mandate stipulates a $2,000 per-employee penalty beyond the first 30 employees. That may actually be cheaper than offering health coverage, CSN notes.

      “I freed a thousand slaves. I could have freed a thousand more if only they knew they were slaves.” - Harriet Tubman

      by Publius2008 on Fri Jun 29, 2012 at 02:05:18 PM PDT

      [ Parent ]

      •  More Background on Small Business (8+ / 0-)

        Thanks for the info.  You beat me to the punch.

        A couple of other background points:

        1.  Most Small Businesses Not Impacted
        As the White House web site highlights:

        Every small business with fewer than 50 employees is completely exempt from the law’s employer responsibility provisions. That means the overwhelming majority – 96 percent of all firms in the U.S. or 5.8 million out of 6 million total firms – of businesses in the country are exempt from the requirement to contribute to the coverage of their employees. Almost all (93 percent)of larger small businesses with 50-199 employees already offer coverage.
        2.  Tax Credits for Small Businesses
        Many articles don't mention the tax credits that are available to small businesses as an incentive for adding coverage:
        If you have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35% (up to 25% for non-profits) to offset the cost of your insurance. This will bring down the cost of providing insurance.
        The tax credits will increase in 2014.

        Forbes and the Los Angeles Times had articles highlighting small businesses adding coverage as a result of the new incentives.

        •  And One More Thing... (3+ / 0-)
          Recommended by:
          KenBee, litho, kerflooey

          Small Business Majority looked at the impact of the ACA's small business incentives in late 2010 and found that they could spur the extension of employer-provided coverage:

          Small Business Majority commissioned a survey of 619 small business owners with fewer than 50 employees from Nov. 17-22, 2010. We wanted to gauge their opinions on two key provisions of the Patient Protection and Affordable Care Act: healthcare tax credits and insurance exchanges. For employers who don't offer health insurance, one-third said they are more likely to do so because of the tax credits, and 31% of employers who currently offer it said the tax credits will make them more likely to continue offering it. The credits, which are available now, allow businesses with fewer than 25 employees that have average annual wages under $50,000 to get a tax credit of up to 35% of their health insurance costs.

          The numbers were nearly identical when respondents were asked if the exchange will make them more likely to provide benefits: 33% of respondents who don't provide insurance said the exchange would make them more likely to do so, and 31% who do provide insurance responded that the exchange would make them more likely to continuing providing it. The insurance exchanges are online marketplaces where small businesses and individuals can band together to buy insurance.

        •  96% exempt!!!...weak democrats... again!! (3+ / 0-)
          Recommended by:
          StrayCat, HoundDog, eXtina

          trying for a job at Rmoney's Media Center.

          How'd I do?

          or try this:

          4 million people penalized/taxed $90 for nothing!
          pretty harsh huh?

          did I get that right, 4 million will have to pay $90 for not having health insurance..that right?
          Well, it doesn't matter if I'm writing for the RMoney campaign.

          Congrats AA, way to go, slogging ahead with all this year after year finally does have it's more obvious rewards, a better country is a little harder to see....

          From those who live like leeches on the people's lives, We must take back our land again, America!...Langston Hughes

          by KenBee on Sat Jun 30, 2012 at 02:11:21 PM PDT

          [ Parent ]

      •  Google's great for dispensing right wing lies (0+ / 0-)


        Mr. Boehner, where are the jobs?

        by Tx LIberal on Sat Jun 30, 2012 at 02:39:51 PM PDT

        [ Parent ]

      •  it depends. (0+ / 0-)
        That may actually be cheaper than offering health coverage, CSN notes.
        at some point, there will be recognition of the "free-rider" business, availing themselves of the benefits of the mandated health insurance (by their employee's), while contributing nothing to the till.
        •  I think it's a question of whether the business (0+ / 0-)

          is likely to be able to afford it.  Many small businesses may not be able to.  It's not too different from giving tax credits to a lot of individuals, recognizing that many individuals can't afford it.

      •  asdf (0+ / 0-)

        Sounds like the government has purposefully chosen to make it cheaper to opt out, this creates a double revenue stream, cash in hand for the gov when the business opts out and the person at the centre of this will still have to buy insurance or face a fine themselves.  Government and insurance watching out for each other.

  •  Solid analysis backed by numbers & graphs (12+ / 0-)

    Your meticulous approach will improve the FP. Congrats. Your hard work deserves a wider audience.

    look for my eSci diary series Thursday evening.

    by FishOutofWater on Fri Jun 29, 2012 at 02:06:14 PM PDT

  •  COLA increase - SS cap is now $110,100 (5+ / 0-)

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Fri Jun 29, 2012 at 02:22:46 PM PDT

  •  I think Dkos should set up a group (7+ / 0-)

    with the purpose of discussing, in order to clarify, important provisions of the ACA for easy use and dispersion to the general public.

    We are going to hear a lot of BS from the right in the next several months and we should have clear, responsive factoids at the ready.

    “I freed a thousand slaves. I could have freed a thousand more if only they knew they were slaves.” - Harriet Tubman

    by Publius2008 on Fri Jun 29, 2012 at 02:33:22 PM PDT

    •  If I'm not mistaken (2+ / 0-)
      Recommended by:
      KayCeSF, msmacgyver

      these Talking Points originated at the White House:

      Today’s Talking Points
      Thursday, June 28, 2012

      HEALTH REFORM: Supreme Court Affirms Americans’ Right to Quality, Affordable Health Care; Mitt Romney Would Repeal Obamacare and Refight Old Political Battles

      Key Point: All three branches of government have now agreed that President Obama’s health care law is the right thing to do. The law is already helping millions of Americans and will help millions more in the years to come. It’s time to move past the same political battles and fully implement the law. Mitt Romney promises to repeal health reform on “day one,” refighting old political battles of the past and denying millions of Americans affordable health care.

          Today the Supreme Court ruled that Obamacare is constitutional. The individual mandate was upheld, along with all the reforms that ensure Americans, not their insurance companies, have control over their health. By 2014, all Americans will have access to quality, affordable health care.

          Obamacare Is Already Working: Obamacare is already helping millions of Americans save money and live healthier lives, and will help millions more in the years to come. Americans aren’t losing coverage or going bankrupt just because they get sick, preexisting conditions are being covered, and millions of Americans will keep saving money on their premiums, preventive care and prescription drugs.

          Largest Health Care Tax Cut in History: Obamacare will save middle-class families up to $2,300 a year on top of its largest health care tax cut in history, worth an average of $4,800 to about 19 million middle-class Americans. Because the rest of us have to pay for those who can afford health insurance but refuse to get it, the court’s decision today means that free riders either have to get insurance or pay a small fine – which would apply to only about 1 percent of Americans. The individual responsibility requirement is the same policy Mitt Romney put in place in Massachusetts.

          It’s Time to Move On: The American people want Washington to move past the political battle over health reform and get to work on the economy. Congress passed health reform, the President signed it, and today the Court ruled that it’s constitutional. It’s time to move on and fully implement the law so we can cut costs and ensure all Americans get the care they need.

          Mitt Romney and Republicans in Congress want to keep refighting the political battles of the past. Romney has made it clear that he would repeal Obamacare, saying he would “kill it dead.” That would hurt millions of middle-class families, women, seniors and young Americans – and he’s pledged to start on “Day One” of his presidency.

          Romney Would Take Away All of Obamacare’s Benefits:
              Banning Insurance Abuses: Insurance companies can’t drop you because you got sick, made a mistake on your application or hit an arbitrary cap on coverage. Already 105 million Americans no longer have lifetime caps on their coverage.
              Free Preventive Care: 86 million Americans got more access to preventive care – from lifesaving cancer screenings to regular checkups to immunizations – covered by Medicare or their insurance without a co-pay or deductible.
              Rebates on Excessive Premiums: By August 1, 12.8 million Americans will have gotten rebates from their insurance company because it spent too much of their premium dollars on administrative costs or CEO bonuses.
              Coverage for Young Americans Starting Their Careers: 3.1 million young adults who would’ve been uninsured have coverage through their parents’ plans.
              Discounts on Prescription Drugs: More than 5 million people got discounts on their prescription drugs in the Medicare “doughnut hole” – each saving an average of more than $600 last year.
              Covering Preexisting Conditions: Starting in 2014, insurance companies won’t be allowed to deny coverage or charge more based on health conditions, protecting the up to 129 million Americans with preexisting conditions. Already up to 17 million kids with preexisting conditions can’t be denied coverage anymore.
              Affordable Coverage for Everyone: People who couldn’t afford insurance will either be able to get insurance through Medicaid or get generous tax credits that finally make coverage affordable. A typical middle-class family could pay up to 60 percent less for the same coverage – the largest-ever health care middle-class tax cut.
              Stronger Medicare: Medicare will stay solvent through 2024, eight years longer than without Obamacare.
              Smaller Deficits: Obamacare will reduce the deficit by more than $120 billion by 2021.

          Romney is Attacking the President for the Same Tax He Created in Massachusetts. The individual mandate in Massachusetts – which Romney personally championed and signed into law – is almost exactly the same as Obamacare’s similar requirement. Massachusetts’ penalties are administered through the tax code, labeled “tax penalties” and are about the same as Obamacare’s fines on free riders.

      # # #

      Give me your tired, your poor, Your huddled masses yearning to breathe free
      ¡Boycott Arizona!

      by litho on Sat Jun 30, 2012 at 02:54:54 PM PDT

      [ Parent ]

  •  You raise a very important issue here (6+ / 0-)

    and it is, as much as it should pain all of us, the problem this White House has with effectively communicating their achievements. This should be a no-brainer: taxes and government revenue are objectively lower than at any time since the Eisenhower administration.

    But you wouldn't know that unless you actively searched for that information. Meanwhile, every wingnut in creation believes otherwise.

    And this is not even necessarily a fault of the White House. 90% or more of the problem comes from a media willing to treat facts and outright lies as having equal explanatory value.

    Fuck me, it's a leprechaun.

    by MBNYC on Fri Jun 29, 2012 at 04:45:25 PM PDT

  •  They'll lie and say the mandate was the tax (3+ / 0-)
    Recommended by:
    Bensdad, gulfgal98, eXtina

    in the decision.

    But it was the penalty SCOTUS labeled (mislabeled) as a tax.

    The phrase "they are lying to you" should probably be included in any response to the GOP on this one.

    As for Rubio, you can still be an American and live overseas. Then you aren't mandated to buy health insurance because you aren't sucking off our teat. Teatsuckericans who want  to live in the US will have to buy insurance though.

  •  Using my 2011 income and expenses.... (6+ / 0-)

    ....I paid approximately $10,000 in health insurance premiums.

    Under ACA, I will get a tax credit of $4000 - 4500 for my health insurance premiums, using my 2011 income and health insurance expenses.  (I currently get a deduction, not a credit, for the insurance expenses.)

    ACA ends up lowering my taxes by $4000 - 4500 a year, and it will do the same for small businesspeople who have health insurance.

    9-11 changed everything? Well, Katrina changed it back.

    by varro on Sat Jun 30, 2012 at 02:17:52 PM PDT

  •  This is very simple:It's not a government program. (1+ / 0-)
    Recommended by:
    True North

    What we saw as a weakness is now a strength. The Affordable Care Act is not a government program. It's a law that requires you to buy private health care insurance. It's a free market bonanza. If you don't buy health care insurance, you pay a slacker tax so you won't get a free rid off the rest of us.


    Get health insurance.

    •  Corporate Welfare with the US Govt holding the gun (1+ / 0-)
      Recommended by:
      George Hier

      to your head.

      Progressive Candidate Obama (now - Nov 6, 2012)
      Bipartisan Obama returns (Nov 7, 2012)

      by The Dead Man on Sat Jun 30, 2012 at 03:19:04 PM PDT

      [ Parent ]

      •  It's a popgun..... (0+ / 0-)

        ....few will pay the tax, and there is no penalty if you do not.  They might dock your refund. I think the amount is ninety bucks or so. No teeth in this law.

        As to whether it is corporate welfare, the corporation won't fare as well after this law, but they will stay in business and have more customers.  It was the best bargain we could achieve.

  •  but, but...................................! (0+ / 0-)

    this is theft of our freedom to be complete and utter imbeciles! it is a clear violation of the Articles of Confederation, err, the constitution, and shall not stand, or sit even! why, i'll flee to canada, if this socialist law is allowed to remain on the books, providing close to the same kind of national health insurance/care that that huge socialist country to our north has!

  •  The problem is (1+ / 0-)
    Recommended by:
    True North

    that things are not explained where we can understand them.

    I fall into the catagory that will buy insurance and have a subsidy ... and I do NOT watch FOX news, listen to rightwing radio or bury my head in the sand.  I come here all the time (along with several other reliable sources ... Booman, Hullabaloo, etc. you get the picture).  AND I am still trying to figure out how this will work in my life and where I can go to sign up for the insurance and if this will even work for me since I live in Oklahoma and we have Mary Failing for governor.

    We need SIMPLE ways of letting people how things work ... numbered steps with color charts might work.  LOL

    I would cheer for the ACA even if I end up having to pay the penalty ... but we need to EXPLAIN how things work since the other side does a damn good job of telling (and repeating) bumper ticker lies until people believe them.

    "Life without liberty is like a body without spirit. Liberty without thought is like a disturbed spirit." Kahlil Gibran, 'The Vision'

    by CorinaR on Sat Jun 30, 2012 at 02:39:45 PM PDT

    Recommended by:
    Bud Fields, True North

    Low income persons and families above the Medicaid level and up to 400% of the federal poverty level will receive federal subsidies on a sliding scale if they choose to purchase insurance via an exchange (persons at 150% of the poverty level would be subsidized such that their premium cost would be of 2% of income or $50 a month for a family of 4).

                UNDER $2 A DAY TOTAL


    •  That's another thing... "exchange" (1+ / 0-)
      Recommended by:

      what a horrible name for what is essentially an insurance "marketplace" or "shopping center". "Exchange" sounds like you're giving up something to get something else. Isn't that what the word means? Nobody knows what the hell an insurance "exchange" is. It should have a better, descriptive name that makes it clear it's a place to comparison shop for insurance and that the competition will, hopefully, reduce premiums.

      "Exchange" is one of those inside-the-beltway terms that does not connect to low-info voters. This is why Dems suck at messaging. Why can't we come up with simple terms that are as pithy as "death panels"?

      I'm a dyslexic agnostic insomniac. I lie awake at night wondering if there's a dog.

      by rennert on Sat Jun 30, 2012 at 04:16:26 PM PDT

      [ Parent ]

  •  Hate To Say It, But...... (2+ / 0-)
    Recommended by:
    goheelsgodems, Bensdad

    the WH & the President simply must start to dumb it down.  Make their point quick.  Make it simple.  Keep repeating it.

    That formula works for even the most low information voter in the country.  If not, FOX News & Rush Limbaugh would go out of business.

    The President assumes people are self interested & will do their own research.  They do not.  They will not.

    Hand feed it if necessary, but sell the benefits of the ACA. about the Freeloaders tax.  Or call it the Slackers Tax.  Keep repeating it, over & over & over again.

  •  This is the Free Rider Penalty Tax (1+ / 0-)
    Recommended by:

    and yes, it is aptly named, IMO...

    Beginning in 2014, all U.S. citizens and legal residents will be required to have“minimum essential coverage” for themselves and dependents or face a penalty. Employers with more than 50 employees who do not offer coverage will be subject to fines.

    Those individuals without coverage will pay a penalty phased in according to the following schedule:

    $95 in 2014 or the flat fee of 1% of taxable income (e.g. an individual earning more than $9,500 would pay a penalty greater than the minimum flat fee of $95)
     $325 in 2015 or the flat fee of 2% of taxable income,
    $695 in 2016 or 2.5% of taxable income.

    The maximum penalty per family is capped at no more than 300% of the minimum penalty (e.g. $695 x 300% = $2,085)

    Children under 18 are assessed at 50% of the minimum penalty.

    If the cost of the lowest available plan is greater than 8% of income there is no penalty for not having coverage. There are additional hardship and religious exclusions.

    If the household “modified adjusted gross income” is greater than specified levels, the penalty is greater.

    After 2016, the penalty will be increased annually by the cost-of-living adjustment.

    When someone is impatient and says, "I haven't got all day," I always wonder, How can that be? How can you not have all day? George Carlin

    by msmacgyver on Sat Jun 30, 2012 at 06:38:14 PM PDT

  •  perhaps 2010 would have been better for Dems if... (0+ / 0-)

    ...Obama had raised taxes. I know I would have been more energized.

    Henceforth I ask not good fortune. I myself am good fortune. Walt Whitman

    by Sacramento Dem on Sat Jun 30, 2012 at 07:36:18 PM PDT

  •  spreading 'the big lie' (0+ / 0-)

    this morning from Danny Westneat, Seattle Times (yes we do have a newspaper)

    "The court ruled today that, in fact, the Affordable Care Act is a tax," the Spokane Republican said. "It is the largest tax in American history."

    None of that is true. The court had ruled only that a penalty for not having insurance is a tax, not the entire act. And neither this tax, nor the entire act, is the largest tax hike in U.S. history.

    But by week's end, this line had been repeated countless times, in sound bites, fundraising letters and tweets across the nation.

    parrotism in journalists, just repeating other journalists (except you avenger)
    At this point, you're probably saying: OK, OK, they're exaggerating. What's the big deal?

    The big deal is that this has the feel of a Big Lie. It's beyond the usual spin. It's one of those choreographed misstatements that is so far off it can perversely become truer than true. Annihilating the facts from the blind side.

    Danny Westneat, Seattle Times (the only one left)

    mindless imitation. Also called parrotry.

    (I posted this from Danny W on the discussion about polling, but really apropriate here)

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