patient protection and affordable care act Archives - Page 4 of 6

Obamacare’s Healthcare Related Tax Provisions

Professor Edward A. Zelinsky of the Benjamin N. Cardozo School of Law has written an article called “The Health-Related Tax Provisions of PPACA and HCERA: Contingent, Complex, Incremental and Lacking Cost Controls.” The abstract states:

“Americans must, into the indefinite future, confront difficult issues pertaining to health care and health care costs. The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA) do not alter the status quo as much as their advocates and their detractors contend nor do PPACA and HCERA resolve the fundamental challenges confronting the U.S. health care system, including the problem of escalating health care outlays. In important respects, PPACA and HCERA will exacerbate that problem.

“Four factors underpin this sobering assessment. First, PPACA and HCERA, while significant, are more incremental in nature than either their proponents or their opponents acknowledge. These laws build upon – indeed, extend – the existing systems of private health insurance and employer-provided health care. Second, many provisions of PPACA and HCERA have delayed effective dates. It is an open question whether future Presidents and Congresses will allow these deferred provisions to go into effect as scheduled. Third, key provisions of PPACA and HCERA are enormously complex. By virtue of such complexity, these laws will impose prodigious enforcement burdens upon the Internal Revenue Service (IRS) and equally immense compliance obligations on taxpayers, in particular, small businesses and many individuals of modest means. The prospects for a complexity-induced political backlash to PPACA and HCERA are considerable. Fourth, these acts merely postpone the tough decisions that must be made about health care and about health care costs in particular. These laws’ efforts to control health care outlays are tepid and deferred. Moreover, PPACA and HCERA, by expanding access to medical services, will increase demand for such services and thereby stimulate health care expenditures.

“While Republicans and Democrats alike portray the adoption of PPACA and HCERA as a pivotal moment in American life, we Americans are fated to conduct a prolonged – indeed, an indefinite – debate about health care and its costs. PPACA and HCERA write an important, but hardly final, chapter in that debate.

“This is not surprising. Democracies rarely make radical breaks from the status quo nor should they. Cost control entails sacrifice which the American political system is today incapable of demanding from the American people.”

Law Professor Says Obamacare Tax Penalty is Unconstitutional

University of Florida Professor of Law Steven J. Willis and 2010 UF law graduate Nakku Chung wrote an article called Constitutional Decapitation and Health Care, in which they argue that Obamacare’s tax penalty is unconstitutional. Here is the abstract:

Willis and Chung demonstrate how I.R.C. § 5000A – the Health Care Act penalty – is an unapportioned capitation tax, violative of U.S. Constitution Article I, Section 9. As they demonstrate, the “penalty” is – at least on its face – a tax. To be a constitutional tax, it must be an excise tax, an income tax, or a proportional capitation tax. Through the process of elimination, they demonstrate the penalty is none of these.

Others convincingly demonstrate the “penalty” is unconstitutional under the Commerce Clause. They argue the “penalty” is indeed a penalty and not a tax. Willis and Chung pick up where that argument leaves off: if that argument fails and the Court finds this is a tax, it is an unconstitutional unapportioned direct tax.

Despite being labeled an excise tax by Congress, the penalty is unlike any existing excise tax because it applies to the failure to act by an individual. Existing failure-to-act excise taxes differ because they apply to entities which have chosen to partake in particular activities. The provision thus fails the historic requirements of an excise tax, namely that it apply to an activity, transaction, or the use of property. The tax also fails the traditional “pass-on” nature of excise taxes. If the Court were to approve it as a uniform excise tax, the direct tax apportionment requirement would be eviscerated.

The penalty similarly fails the 16th Amendment definition of an income tax. Not only does it appear not to tax income, it fails to operate as an income tax, and it fails the 16th Amendment realization requirement long accepted by the Supreme Court. Willis and Chung dismiss – as unrealistic academic dogma – arguments for ignoring the realization requirement. They acknowledge, but refute, academic arguments criticizing the Pollock and Macomber decisions, as well as arguments for ignoring the Constitution’s direct tax apportionment requirement.

What to Expect in Next Year’s Health Benefits Offerings

New York Times: “come fall you’ll probably be asked to absorb even bigger cost increases than in the last few years. . . . changes made in response to the health law will add an extra 2 to 3 percent in cost increases, pressuring employers to engage in even more cost-sharing with employees — whether through higher premiums, co-payments or other out-of-pocket costs.”

See “You’re losing your plan – ObamaCare’s true face emerges,” which states:

“Critics warned that the Obama bill meant a federal takeover of health care, with Washington bureaucrats making core decisions about medical care. With ObamaCare taking shape, that’s exactly what consumers are getting. Saying “we told you so” is no consolation to those who took the president at his word.”

Fending Off Health Taxes

Barrons: “You may soon be paying $30,000 more in taxes, thanks to the health-care law. Here’s what to do. SAY WHAT YOU MAY ABOUT THE NEW health-care law, it won’t be cheap for high-net-worth taxpayers. The law’s $250 billion in tax hikes for individuals are aimed squarely at big earners.”

Legal Challenges to ObamaCare Rapidly Multiply

Plaintiffs in lawsuits filed to overturn Obamacare include Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, South Dakota, Pennsylvania, Texas, Utah, Washington, Virginia, the Thomas Moore Law Center, the National Federation of Independent Businesses, and the U.S. Citizens Association.

Rasmussen Reports: “63% Favor Repeal of National Health Care Plan.”

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