Taxation Nightmares: Why the Supreme Court's decision is worse than Obamacare itself
By now, I’m sure you’ve heard or read the arguments some conservatives are making to excuse Chief Justice John Roberts’ decision to uphold Obamacare. They are feeble attempts to find a silver lining in what happened on Thursday, but in reality, there is no good news to be found there. Chief Justice Roberts’ decision did something that Obamacare itself could not to: it dealt a blow to limited government from which the United States may never recover.
I’m not trying to be hyperbolic. Stick with me, and I’ll explain why. First, let’s look at the main idea that’s been circulating that would excuse the majority decision.
“He limited the scope of the Commerce Clause in a meaningful way.”
That’s a quote from the Weekly Standard, a long respected conservative magazine. To some extent, it may be true: the majority opinion authored by Roberts did say that Congress cannot use the Commerce Clause to regulate inactivity. However, from there Roberts gave Congress permission to do the very same thing through taxation. What good is limiting the Commerce Clause if you remove the limitations from the Taxation Clause? Roberts could have limited the Commerce Clause, and struck down the healthcare law. He did not.
Justice Roberts, along with the other liberal justices, removed all limitations on what the Federal Government can coerce American citizens to do. Here’s how the Wall Street Journal put it this morning:
The government cannot make you eat broccoli, though it may levy a non-broccoli-eating tax on any who refuse.
Imagine for a moment the implications of such a legal precedent:
You don’t want to drive a hybrid or electric car? That’s fine, but you have to pay non-compliance tax.
You don’t want to send your children to public school? No problem! Just pay the Private Education tax. Only rich people can afford to send their children to private school anyway. You must pay your fair share to help the poor get educated.
Do you want to own a gun? Sure! Own as many guns as you like, but remember to pay the 2nd Amendment tax! The IRS thanks you for exercising your rights!
Want to have three children? Go right ahead! Have lots of babies! Please make sure you pay the Multiple Carbon Footprint tax for each additional child after the first one.
Don’t want to buy tea? Sure, just pay the tea-tax. Wait! That sounds familiar!
Let your imagination run wild. The Supreme Court removed all limitations on punitive taxation. The Federal government may now tax both activity and inactivity. It’s okay if you don’t comply, but you will have to pay for it.
To make matters worse, repealing Obamacare will not be enough to put the genie back in the bottle. The legal precedent will still stand, even if the entire statute is removed from the law books by the next Congress and President.
The only thing that can undo Justice Roberts’ abominable decision is an amendment to the Constitution prohibiting coercive taxation or a new conservative majority on the Supreme Court to overturn his precedent.
So, pat yourself on the back Chief Justice Roberts. You did something that President Obama could have never done himself. King George would be proud.
Now that the Supreme Court has ruled that Obamacare is a constitutional tax of the highest order — one imposed on you at birth — Michael Moore is back in the news. One would think the headline would be that liberals are now in the weird position of cheering the defacto Obamacare Birth Tax, all the taxes in between, and the Death Tax … but instead, the Sicko director was given time to discuss the need to go even further.
Obamacare in action: 1 in 10 employers plans to drop health benefits
Behold: the natural result of Obamacare Obamatax. For many employers the choice is a catch-22. Either they fire current employees because they can no longer afford the health benefit requirements, or they pay the more affordable tax and drop health insurance benefits all together. As many as 1/10 of American employers now say they plan pick the latter option.
from the Hill:
About one in 10 employers plans to end workers’ health insurance as the new healthcare law takes effect, according to a new study.
The finding could bolster opponents of the law, who argue that its changes to the healthcare system will force workers out of insurance plans they like. Supporters of the law say most people will keep their current coverage.
Surveying 560 U.S. companies, consulting firm Deloitte found that 9 percent of employers are planning to drop employee health benefits within three years. Eighty-one percent said they would continue covering employees, and 10 percent said they were not sure.
The study was conducted between February and April, before the Supreme Court ruled to uphold most of the healthcare law. Deloitte said it does not believe the decision would change companies’ responses.
The law includes a provision requiring people to carry health insurance or pay a fine, and seeks to make it easier for Americans to find and afford coverage outside of their employers.
The study found that smaller firms were most likely to say they will drop coverage. Thirteen percent of companies with 50 to 100 workers said they would end policies within three years, compared with 2 percent of companies with more than 1,000 workers.
Now, the burden will fall to the individual who must buy health insurance or pay a tax himself, and this option is also becoming more difficult. Health insurance premiums have only gone up under Obamacare, despite the President’s promises that it would do the opposite.
THESE ARE THE TOP 5 WORST TAXES ‘OBAMACARE’ WILL IMPOSE IN 2013
THE ‘OBAMACARE’ MEDICAL DEVICE TAX
Tax Increase: $20 Billion
Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales — even if the company does not earn a profit in a given year. In addition to killing small business jobs and impacting research and development budgets, this will increase the cost of your health care — making everything from pacemakers to prosthetics more expensive.
THE ‘OBAMACARE’ ‘SPECIAL NEEDS KIDS TAX’
Tax Increase: $13 Billion
The 30-35 million American who use a Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2,500 (currently the accounts are unlimited under federal law, though employers are allowed to set a cap).
There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are several million families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax provision will limit the options available to these families.
THE ‘OBAMACARE’ SURTAX ON INVESTMENT INCOME
Tax Increase: $123 Billion
This is a new, 3.8 percentage point surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income:
The table above also incorporates the scheduled hike in the capital gains rate from 15 to 20 percent, and the scheduled hike in dividends rate from 15 to 39.6 percent.
THE ‘OBAMACARE’ ‘HAIRCUT’ FOR MEDICAL ITEMIZED DEDUCTIONS
Tax Increase: $15.2 Billion
Currently, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). This tax increase imposes a threshold of 10 percent of AGI. By limiting this deduction, Obamacare widens the net of taxable income for the sickest Americans. This tax provision will most harm near retirees and those with modest incomes but high medical bills.
THE ‘OBAMACARE’ MEDICARE PAYROLL TAX HIKE
Tax Increase: $86.8 Billion
The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate instead. This is a direct marginal income tax hike on small business owners, who are liable for self-employment tax in most cases. The table below compares current law vs. the Obamacare Medicare Payroll Tax Hike:
I want to begin by saying that Professor Kohen seems like a nice enough fellow, so I don’t intend for this post to be construed as malice of any kind toward him. He did describe my writing as “histrionics” and “stunningly wrong headed,” but we’ll get to that a little later on.
To understand the context, you might want to go back and read my post called “Taxation Nightmares” to which the good professor was responding.
from Running Chicken (Professor Kohen’s unfortunately named blog):
Let’s begin by noting that almost all of the horrific imaginary taxation scenarios already exist. If you want to own certain types of guns, there’s an excise tax. If you want to send your kids to private school, that’s great! But you still pay taxes that support the public schools that your children don’t attend. And — gasp! — the federal government could pretty easily slap an excise tax on tea if it was so inclined, just as it did with “whiskey, rum, tobacco, snuff, and refined sugar” back in the heady days of the 1790s (when the blogger, along with Justices Scalia and Thomas, seemingly imagine some sort of tax-free freedom and liberty paradise existed).
But I’m a glutton for punishment and so I wrote to the blogger and asked whether he opposes excise taxes in general. In other words, does he have a problem with taxes on liquor, cigarettes, gasoline, and on and on. Of course, he does. His position, so far as I can tell, is that the greatest thing about being an American is that the Constitution provides you with the freedom to have absolutely nothing whatsoever to do with any other American … so long as you can afford it. And the worst thing about America, of course, is that liberals (and traitorous activist judges) are trying to take away the freedom of decent, honest, hard-working people to entirely distance themselves from the political community.
But here’s where things really get fun. The blogger wanted to give me a civics lesson:
And yes, I did want to give him a civics lesson as I found it very lamentable that a college professor at the University of Nebraska would be asking me what kinds of taxes are permissible under the US Constitution. Here’s how that went down:
Professor Kohen, then apparently happy that I provided him with some free content, wrote this on his blog:
The trouble is that he’s wrong.
Chief Justice Roberts didn’t write “into law a new form of taxation not present in the Constitution” and he didn’t open any tax-loving liberal floodgates.
He then posted some bits from Chief Justice Robert’s majority opinion without bothering to include anything from the joint dissent from the other four Justices.
Think back to when the blogger was aghast at the notion that there might be a tax on having children. We actually have precisely the opposite — a tax credit for having them! And that means, of course, that there’s a tax penalty fornothaving them. I have a child; I get a credit and thus pay less. You choose not to have a child; you don’t get a credit and thus pay more. Your inactivity results in a higher tax burden. Just like the inactivity with regard to purchasing health care.
The same is true, as Chief Justice Roberts writes, of home ownership and professional education.
So … if you’ve been super-duper sad this week about losing all of your sweet, sweet freedom or about having to participate in the life of the political community or about assisting your fellow citizens who live in poverty, my sense is that you’ll need to find a different route to criticize the majority opinion that Chief Justice Roberts author
Professor Kohen, It’s almost funny how much you misrepresent my opinion on excise taxes. There’s a big difference between not being a fan and thinking they’re unconstitutional. No, I don’t like paying taxes on gasoline (who does?), but it’s probably preferable to having more toll roads!
I never said that the government WOULD tax you for having additional children, only that they COULD (and some environmentalist think this would be a good thing). The government now has the legal authority to tax you both ways! I find it very sad how willing you are to let the Federal Government tax both your activity and your inactivity.
Taxation isn’t just about raising revenue for the Government. I agree that some taxes are necessary for government to operate, but they (along with the size of government) must be held in check. Unfortunately, taxes are most often punitive and coercive, with the government using them to force its citizens into or out of certain activities.
May I remind you (as it is currently July 4) our Revolutionary War was fought largely over taxation without representation. Obamacare could never have passed the House or Senate had it been written as a tax. Nancy Pelosi, Harry Reid, and Obama himself INSISTED (and still do) that it’s not a tax for that very reason. Yet Roberts upheld it as something the authors of the bill specifically said it was not.
You may smear me as “histrionic.” That’s fine. You may mock me for being “super-duper sad about losing all my sweet, sweet freedom.” I certainly am. You may even falsely accuse me of not caring about the impoverished, though the numerous deductions for charitable giving on my income tax return tell another story.
I remain unashamed to mourn the loss of freedom in this great country, and I am saddened when people like you cheerfully defend the government for chipping away at our liberty.
Look at how bad the government runs stuff already, Congress has what 11% approval rating, the postal service sucks, our school system isn’t what it’s supposed to be, but yet you trust it with your life?
In federal courts today and tomorrow, the Obama Administration’s Department of Justice (DOJ) will be arguing against the right of two business owners and one Christian college to operate and serve in accordance with their deeply held beliefs.
Obamatax will go down...but maybe not the way we want
The laws of economics cannot be overcome. Just as gravity will always pull things toward the Earth, it is an unavoidable fact that, in the words of Thomas Sowell, “There is no such thing as a free lunch.” And even though the laws of aerodynamics can seemingly overcome gravity for a while, the government can give the illusion of a fix for the natural negative consequences of their meddling but it’s exactly that, an illusion. It will come crashing down. It always does.
From the WSJ:
Fans of ObamaCare must be busting a gut three times over. The mandate that conservatives now hate was originally a conservative proposal. In upholding it, Chief Justice John Roberts followed President Obama’s Rose Garden instructions to the letter: The Court must find an act constitutional if it happens to be the signature act of a president running for re-election.
Worse, in doing so, he may have read any constitutional limit on Congress out of the Constitution while pretending to do the opposite. Congress cannot compel you to do anything Congress wishes, but it can impose taxes on you until you finally have no rational alternative but to do whatever Congress wishes.
History will judge whether Mr. Roberts saved the reputation of the court or lost his nerve. Many conservatives obviously suspect the latter. Resolved: The government cannot make you eat broccoli, though it may levy a non-broccoli-eating tax on any who refuse.
…This was always the fatal problem of ObamaCare. Reality could not have instructed President Obama more plainly: The last thing we needed, in a country staggering under deficits and debt, a sluggish economy and an unaffordable entitlement structure, was a new Rube Goldberg entitlement. The last thing we needed was ObamaCare. The nation and the times were asking Mr. Obama to reform health care, not to double-down on everything wrong with the current system.
All we are doing by passing this massive government spending program is passing debt on to our children and grandchildren. Sure, I could go get a loan and buy a big house in Beverly Hills, but eventually I’m going to have to pay that loan back. If I die before paying my debt, that responsibility falls to my children. What President Obama did by passing obamatax (and yes, that’s what we’re calling it from now on) is give a big fat bill to people who will have never even had the opportunity to vote against him.
Obamatax is doomed to inevitable failure. Reckoning will come. I hope it’s in the form of repeal, but reckoning will come, nonetheless.
Saying we have had the best job growth since the 90’s right now…
Really Mr. Obama… Nobody is hiring right now due to Obamatax! Seriously I was so close to getting a job. They told me, “Due to the supreme court decision. We are now slowing down our hiring of new employees.”
Seriously. I lost a potential job due to Obamatax already. You’re ruining our economy Obama.
Here’s another thing I didn’t hear the Republicans ask yesterday. Why, if 85% of the people in this country have insurance, did they write a 2,700-page bill and then thousands more pages of regulations to change everything for 15% of the population? Just ask the question.