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Plainly it isn't a stupid argument as it's one that's been made by some of the smartest lawyers and economists in the world. I would be inclined to think that it's stupid to write off the argument with no analysis whatsoever.
Certainly tax experts understand the argument:
Appeal to authority?
I think CBO is correct: for federal budget purposes, the penalty on the uninsured would indeed be a tax, since it reflects the exercise of the government’s sovereign power.
However, and this may surprise you, I also think the President has an important point which he tried, with only limited success, to articulate. I would describe it as follows: A well-meaning government levies taxes for two different reasons:
- First, it levies taxes to finance the government. National defense, the court system, the social safety net, etc. all require financing. Taxes allow the government to provide those services.
From a budget / government sovereignty perspective, Pigouvian taxes are indeed taxes. The government is using its power to collect money from people and companies that engage in the taxed activity. But revenues are not the primary purpose of the policy. Instead, the goal is to solve another problem such as pollution.
- Second, taxes are a tool to discourage behavior that is harmful to others. For example, a government may levy a tax on emissions of carbon dioxide if it worries about potential damage from climate change. In economics-speak, that’s using a tax to internalize an externality. Such taxes are often known as Pigouvian taxes – a concept made famous by Greg Mankiw’s Pigou Club which advocates for greater use of them.
The President is viewing the tax on the uninsured as a Pigouvian tax. And he’s right, at least up to a point. If an individual can afford insurance but chooses to go without it, that person may impose significant costs on other people. Why? Because they will still get health care if, for example, they are in an auto accident. Those costs will then be paid by others (e.g., by the hospital). In that sense, the uninsured individual imposes an externality on others.
And that externality only gets larger if insurance companies are forbidden to exclude new beneficiaries because of pre-existing conditions. If that regulation goes into effect (as proposed in the health bills now pending in Congress), then an uninsured person can potentially impose substantial costs on everyone else by waiting until they have an expensive chronic disease before they purchase insurance. Because they can’t be charged more for waiting to getting coverage, they would be able to pass a substantial cost burden onto other people.
The purpose of a tax on the uninsured is to prevent such cost-shifting. The tax is thus a policy tool, not primarily a way to raise new revenue. That’s the distinction that the President was trying to articulate. And it’s an important one.
When is a Tax Not a Tax? « Donald Marron
Not all tax penalties involve benefit to someone else just as not all tax credits benefit everyone. Take the children's tax credit. If I don't have children I just do not participate. Those who have children get a tax credit those who don't, won't get one, but I am not being charged more because I don't have children. I am not being penalized, I'm just not participating in the tax credit.
Okay, y'all are going to make my head explode here. YOU ARE BEING PENALIZED if you don't get the child tax credit because you are therefore paying a larger percentage of the tax burden then you would otherwise be paying. Conservatives often complain because about 47% of Americans aren't paying any federal taxes. Why do you think that is? In significant part it's because of the child tax credit, which was raised to $1,000 per child under Bush. Your taxes have to be higher and/or the services government provides have to be smaller to pay for those tax credits that you aren't getting.
Holy ****, how many times do I have to point out that appealing to authority is perfeclty legitimate as long as the person cited really is a credible authority on the topic.
So for the hundredth time,
Essentially, President Obama is saying it should be upheld because it is popular, not because it is legally/Constitutionally correct.
Wow. Just... wow!
No, it's not. If I get a deduction for installing solar panels, but I choose not to install solar panels. I have bought nothing. I owe nothing to the government for not installing them. If I buy a Chevy Volt and receive a tax deduction, but if I choose not to buy a car at all, I have bought nothing and I owe nothing to the government.
Just my opinion - for those who are arguing about the distinction between a penalty and a credit, the distinction in my mind is largely artificial - they are two sides of the same coin. In terms of cost, whether a penalty or a credit is applied, you're always better off being "credited" or "not penalized."
Why are these remarks 'unprecedented' only when a black democratic President says them?? -- The right has been screaming 'judicial activism' for years....
Come on, righties, try to be a little self-aware of your own hypocrisy...
Actually they will bill you afterwards, Unless of course you have given false identification. and this applies ONLY to emergency rooms. You got long term care problems it doesn't help. You need a non emergency surgery, SOL etc. It does not compare.
That "emergency only" care adds 25% to YOUR HC premiums. Your ok with the responsible people having to pay extra but the deadbeats gaming the system can't be charged a dime. That is very generous of you. Stupid but generous.
Just my opinion - for those who are arguing about the distinction between a penalty and a credit, the distinction in my mind is largely artificial - they are two sides of the same coin. In terms of cost, whether a penalty or a credit is applied, you're always better off being "credited" or "not penalized."
That "emergency only" care adds 25% to YOUR HC premiums. Your ok with the responsible people having to pay extra but the deadbeats gaming the system can't be charged a dime. That is very generous of you. Stupid but generous.
That "emergency only" care adds 25% to YOUR HC premiums. Your ok with the responsible people having to pay extra but the deadbeats gaming the system can't be charged a dime. That is very generous of you. Stupid but generous.
Ubamacare doesn't change that fact. Tell me how our government is going to force the homeless, the severely poor to purchase heathcare in this country? My premiums have already doubled since Ubamacare. If I was already paying for those who use emergency care without paying, why did my premiums double???
Really doubled? You are really going to be screwed in 2 yrs when it actually goes into effect then....
Ubama?
So will yours unless you're a freeloader.
No, I pay for mine...just wondering why mine has barely gone up the last few years...you're gonna get screwed twice!...I can see why you're so angry!
"Obama’s ‘Unprecedented’ Remarks: Is the President Running Against the Supreme Court?"
Oh the outrage!!!1111!!!!
I'd like to see evidence of outrage from the same outraged people when Gingrich proposed that as president he would send US Marshalls or the Capital Police over to arrest judges whose rulings he disagreed with.
None other than Larry Summers has perhaps explained it best: http://www3.amherst.edu/~jwreyes/econ77reading/Summers
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