WASHINGTON – Memo to President Barack Obama: It's a tax. Obama insisted this weekend on national television that requiring people to carry health insurance — and fining them if they don't — isn't the same thing as a tax increase. But the language of Democratic bills to revamp the nation's health care system doesn't quibble. Both the House bill and the Senate Finance Committee proposal clearly state that the fines would be a tax.
And the reason the fines are in the legislation is to enforce the coverage requirement.
"If you put something in the Internal Revenue Code, and you tell the IRS to collect it, I think that's a tax," said Clint Stretch, head of the tax policy group for Deloitte, a major accounting firm. "If you don't pay, the person who's going to come and get it is going to be from the IRS."
Democrats aren't the first to propose that individuals be required to carry health insurance and fined if they refuse. The conservativeHeritage Foundation called for such a mandate in the 1990s' health care debate, although its proposal differed from the ones pending in Congress. Heritage has since dropped the idea and now favors usingtax credits to encourage people to buy coverage — carrots and not sticks.
During the 2008 political campaign, Obama opposed making coverage mandatory because of the costs. His position has shifted now that it's becoming clear such a requirement will be part of any legislation that Congress sends him. Conservative activists are calling it a violation of his pledge not to raise taxes on the middle class.
"The fact that it is imposed on people and they have no choice in paying it, and the fact that it's administered through the tax system all make it look like a tax," Williams said. The center is a joint venture of the Urban Institute and the Brookings Institution.
It wouldn't be the first asterisk added to Obama's campaign pledge on taxes. Earlier this year, he signed a tobacco tax increase to pay for children's health insurance. Even that can be read as a violation of his expansive campaign promise.
"I can make a firm pledge," he said in Dover, N.H., on Sept. 12, 2008. "Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes." Clearly, this was a false campaign promise.