Friday, December 18, 2009

That Health-Care Tax Pledge

From the Wall Street Journal.com:

'If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime." So spoke Barack Obama at his first address to Congress in February. We're about to find out if the President cares about that promise as much he does passing a health-care bill.

Congressional Democrats have loaded up their health bills with provisions raising taxes on the middle-class by stacks and stacks of dimes. And Senate Democrats on Tuesday made clear they won't be bound by the President's vow; 54 voted to kill Idaho Republican Mike Crapo's amendment to strip the bill of taxes on families earning less than $250,000 and individuals earning less than $200,000.

Those tax hits include a mandate of up to $750 a year for Americans who fail to purchase health insurance; new levies on small businesses (many of which file individual tax returns) that don't offer health care to employees; new tax penalties on health savings accounts and flexible spending accounts; and higher taxes on medical spending, including restrictions on medical itemized deductions, as well as taxes on cosmetic surgery. A Senate Finance Committee minority staff report finds that by 2019 more than 42 million individuals and families—or 25% of all tax returns under $200,000—will on average see their taxes go up because of the Senate bill. And that's after government subsidies.

This profusion of tax hikes is central to the Democratic fiction that the Senate bill is budget neutral. And because many Senate Democrats are cool to the House proposal to fund legislation with a surtax on the "wealthy," many of these middle-tax hikes will likely remain in final legislation. Yet President Obama is embracing the bill.

Democrats are instead trying to claim that some taxes really aren't taxes. The President in September engaged in a debate with ABC's George Stephanopoulos, with the President arguing that the individual mandate isn't a tax since it is for the good of America. Michigan Senator Debbie Stabenow says increasing the amount of medical expenses a person must accumulate before deducting them also isn't a tax because "most Americans" don't itemize. Except the millions of middle-class Americans who do. Democrats have argued their restrictions on health savings accounts simply close "tax loopholes" and therefore also aren't new taxes.