Healthcare mandates: Are they a tax or not?

A tax expert says Obama's plan could cost some families more money. Whether that is a tax is largely a matter of semantics.

Karin Cooper/CBS Face the Nation/AP
President Barack Obama is seen on a monitor as he appeared on CBS's "Face the Nation" in Washington, on Sunday.

The debate over healthcare reform is now also a debate over what the meaning of "tax" is.

Opponents of President Obama and congressional Democrats say that a mandate for Americans to buy insurance – or else pay a penalty to the government – would amount to a new tax on much of the middle class.

The semantic debate has gathered steam since Sunday, when Mr. Obama tried to deflect a dictionary-wielding TV anchor on the subject.

"For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase," Obama told ABC's George Stephanopoulos.

But even if one calls this “responsibility” a "mandate,” rather than a tax, the penalties for families that don’t comply would be owed to the Internal Revenue Service. Some experts say that portion, at least, qualifies as a tax.

Conservatives circle the wagons

At any rate, Obama’s verbal efforts have only served as fuel for conservative critics.

Fox News host Bill O'Reilly went so far as to bring on an expert at parsing body language.

"That's when the finger – yes, that's when the finger stops being aggressively pointed," Tonya Reiman told Mr. O'Reilly as they replayed tape of Obama on ABC.

“A tax by any other name still leaves a hole in the wallet,” blogger Bobby Eberle wrote on GOPUSA Tuesday.

The tax debate raises challenges for the White House on two fronts:

1. It complicates the White House's already difficult challenge of winning support from core middle class voters – many of whom would have to devote more of their paychecks to healthcare under the plan, whether they call it a tax or not.

2. The plan could represent a violation of a campaign pledge by Obama not to raise taxes families making less than $250,000 a year.

"The $750-a-person tax for not having health insurance is a tax," former Bush adviser Karl Rove told the Washington Post. "Its imposition will break Obama's pledge.”

So is it tax?

“You get into a lot of semantics here,” says Eric Toder, an expert at the nonpartisan Tax Policy Center in Washington. But he says if money is owed to the IRS, “I supposed you would call that a tax.”

Obama likened the mandate for individuals to rules requiring drivers to have automobile insurance. That may be a useful analogy, but Mr. Toder says it’s not a perfect parallel, since people can choose not to drive cars.

Separate from the question of what is technically a tax, there’s also the question of what affects family pocketbooks like a tax.

The answer may be nuanced, Toder says, because the government will be offering subsidies in addition to laying down the mandate. Some families might get a product they want – the insurance – thanks to the subsidy. Others, who get a smaller subsidy or who don’t want as much insurance, may feel taxed.

The debate over taxes, in the end, is part of a larger puzzle: How to pay for expanded access to healthcare in America. That will mean tough choices, experts say, including some parties paying money they’d rather not. It also means solving the problem of fast-rising medical costs, an issue where current bills in Congress may make only modest headway.

The “tax” issue resonates after all, because voter pocketbooks are only so deep.


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