A project of the Galen Institute

Issue: "Taxes"

Kill the tax exclusion for health insurance

Thomas P. Miller
National Review
Thu, 2014-08-21
"Last Saturday, August 16, marked the 60th anniversary of the enactment of the Internal Revenue Code of 1954, which permanently established in federal law generous tax advantages for employer-paid health-insurance premiums. Those group health benefits are excluded from employees’ taxable wages and thereby are not subject to income and payroll taxes. This tax break has been praised as a pillar of our employer-based private health-insurance system, but its age is showing. A growing list of critics agrees that the tax exclusion needs to be changed. The key questions are when and how. We should expect a significant overhaul, but not a full retirement party, within the next five to ten years. The simplified history of the tax exclusion for health care usually begins with a 1942 ruling by the War Labor Board that allowed employers to bypass wartime wage controls by providing fringe benefits to workers.

How the IRS Is Botching Obamacare Tax Collection

Brianna Ehley, Fiscal Times
Wed, 2014-08-20
"he Internal Revenue Service is struggling to collect a new tax that’s critical to financing the president’s health care law – and auditors say the IRS’s flawed collecting process is allowing it to raise only three-quarters or so of the revenue that was originally expected.A new report from the Treasury Inspector General for Tax Administration (TIGTA) flags the enforcement of the medical device excise tax, one of a handful of new taxes imposed under the Affordable Care Act.Related: Obamacare’s Next Challenge: IRS VerificationThe Affordable Care Act’s excise tax – equal to 2.3 percent of the sales price of medical devices – took effect in January and is estimated to bring in about $20 billion through 2019, the Joint Committee on Taxation has said.Auditors say the IRS had originally estimated that the tax would bring in about $1.2 billion in the second and third quarters of 2013 – but it’s only received $913.4 million."

Consumers’ next Obamacare challenge: Tax forms

Paige Winfield Cunningham and Mackenzie Wienger, Politico
Tue, 2014-08-12
"If consumers thought logging on to HealthCare.gov was a headache, sorting through complex forms ahead of tax deadline day 2015 is their next big Obamacare challenge. The health care law’s benefits are rolling out, but its major math problems start next year as the IRS tries to ensure that millions of Americans are correctly calculating their benefits and that those who don’t have coverage are penalized unless they qualify for an exemption. That means much new paper-shuffling between now and April 15, which could be especially confusing for low- and middle-income Americans unaccustomed to lots of reporting to the IRS. The insurance exchanges and employers must send consumers details about their health plan and benefits or exemptions in time for them to file a tax return.

Consumers’ next Obamacare challenge: Tax forms

Paige Winfield Cunningham and Mackenzie Weigner, Politico
Mon, 2014-08-11
"If consumers thought logging on to HealthCare.gov was a headache, sorting through complex forms ahead of tax deadline day 2015 is their next big Obamacare challenge. The health care law’s benefits are rolling out, but its major math problems start next year as the IRS tries to ensure that millions of Americans are correctly calculating their benefits and that those who don’t have coverage are penalized unless they qualify for an exemption. That means much new paper-shuffling between now and April 15, which could be especially confusing for low- and middle-income Americans unaccustomed to lots of reporting to the IRS. The insurance exchanges and employers must send consumers details about their health plan and benefits or exemptions in time for them to file a tax return.

It Wasn’t a Tax Before It Was a Tax: Court Upholds Obamacare Individual Mandate

Elizabeth Slattery, The Heritage Foundation
Thu, 2014-07-31
"A three-judge panel of the D.C. Circuit Court of Appeals on Tuesday ruled against a challenge to Obamacare’s individual mandate based on the origination clause of the Constitution. The Supreme Court held in NFIB v. Sebelius (2012) that Obamacare’s individual mandate was constitutional because it was a tax. The Constitution also says tax legislation must originate in the House. But the Obamacare individual mandate tax did not originate in the House. Senate Democrats took a House bill that provided tax credits to veterans purchasing new homes, gutted its language and “amended” it with the language that would become Obamacare. Todd Gaziano, one of the lawyers for Matt Sissel, likened this amendment to “the complete destruction of a house and the erection of a massive skyscraper on the same street address.” In a unanimous ruling in Tuesday’s case, Sissel v. U.S. Department of Health and Human Services, the D.C.

The Medicare Funding Problem Threatening Medicare’s Future

Bob Moffit, The Heritage Foundation
Thu, 2014-07-31
"Medicare’s true cost is the biggest problem in Washington and the one most ignored. The long-awaited 2014 Medicare Trustees report is out, and the “spinning “ is well underway. But the media is not yet reporting another big finding – this one by the Medicare Actuary and revealed on the same day: Taxpayers face a Medicare unfunded liability ranging from $28 trillion to $35 trillion, depending on the most realistic assumptions about the future. In other words, Washington politicians have promised seniors that over the next 75 years (the so-called long-term “actuarial window”) they will receive tens of trillions of dollars of Medicare benefits that are not paid for. It is Washington’s biggest, most expensive and most difficult federal entitlement problem. And it is one most politicians—with a few noble exceptions—continue to ignore."

Republicans Will Run On An Obamacare Replacement in 2016 – Will Democrats?

Ben Domenech for Morning Consult
Sat, 2014-07-26
"The decision in the Halbig v. Burwell case this week was an unexpected legal boon to opponents of Obamacare. Spearheaded by the Cato Institute’s Michael Cannon and law professor Jonathan Adler, the case will almost certainly lead this debate about the text of the Affordable Care Act back to the Supreme Court. My colleague Sean Davis has written a comprehensive piece on the case, particularly on the nature of the supposed “drafting error” at its core. But whatever the ultimate outcome for Halbig, the case serves as a reminder of the uneven ground on which Obama’s health care law is likely to be standing over the next two years.

Federal officials cap fines for not buying health insurance

The Associated Press
Sat, 2014-07-26
"Federal officials have capped the amount of money scofflaws will be forced to pay if they don't buy insurance this year at $2,448 per person and $12,240 for a family of five. The amount is equal to the national average annual premium for a bronze level health plan. But only those with an income above about a quarter of a million dollars would benefit from the cap. Those making less would still have to pay as much as 1 percent of their annual income. The penalty for the first year starts at $95 per adult or $47.50 per child under 18. The penalty for not buying insurance increases to 2 percent of income or $325, whichever is higher, for 2015. The fines are due when people file their 2014 taxes. The figures, released late Thursday, are important because the White House has only provided theoretical caps in the past.

Three Conservative Ideas Buried Within Obamacare

Greg Scandlen, The Federalist
Tue, 2014-07-15
"The Affordable Care Act is the worst piece of legislation ever passed into law in the United States. It was poorly conceived, poorly written, poorly enacted, and is being poorly implemented. The thing is a mess. However, it does open up some doors that were firmly locked before—things that most free-market economists have been espousing for years without success. We should not run away from those things just because they have President Obama’s name on it. I am not talking about the things the idiot media think are popular—the slacker mandate, open enrollment, equal premiums for men and women, and free “preventative” services. These are all terrible ideas for reasons I won’t go into here (unless you insist). I’m talking specifically about several more important elements of the law that were not well crafted in this particular bill, but can now be used as precedents for major improvements in American health care."

Bosses bash Affordable Care Act: report

Gregory Bresiger, NY Post
Thu, 2014-07-10
"ObamaCare hurts businesses. That’s the result of an exhaustive study polling small to medium-sized businesses. The controversial government health-care reform increases company and employee costs and sometimes stops companies from hiring as well, participants told the International Foundation of Employee Benefit Plans in its new study. “More than half of single employers believe the Affordable Care Act has had a negative effect on their company,” according to the report. The survey, which polled some employers and their health-care pros, found that the majority of respondents, 54 percent, thought the effect of the ACA on their firms had been “negative” or “very negative.” The same respondents also expected that the negative effects from ACA would increase to 66 percent in the near future as the program unfolds."

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