September 21, 2009
"I can make a firm pledge. 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."
-President Barack Obama, Rally in Dover, New Hampshire, September 12, 2008
"Merriam Webster's Dictionary: Tax-‘a charge, usually of money, imposed by authority on persons or property for public purposes.'"
-George Stephanopoulos, interview with President Obama, September 20, 2009
One year after making his now-famous "No new taxes" pledge during the campaign, President Obama has attempted to deny the impact of his health "reform" proposals on the middle class. However, most economists, his own advisors, his previous campaign rhetoric, and sheer logic all dictate that the President should provide straight answers to several inconvenient questions:
- Finance Committee Chairman Baucus' bill would require individuals with three times the federal poverty level to spend 13 percent of their income on health coverage premiums. Committee staff estimates found that in 2016-the fourth year after the bill's mandates and insurance "reforms" would take effect-a family of four making $72,000 would be required to pay up to $9,400 in premium costs alone. Additionally, a family subject to the bill's maximum annual cost-sharing would spend 29.5 percent of its income on health costs. How is requiring Americans to spend nearly one in seven dollars of income to pay for government-approved insurance, and nearly one in three dollars on potential health care costs-more than a family's mortgage payments in most parts of the country-not a massive tax increase on the middle class?
- In a January 31, 2008 presidential debate, candidate Obama asked how a mandate to purchase health insurance would be enforced: "Are you going to garnish [people's] wages?" Likewise, on Meet the Press in April 2008, Obama's senior campaign advisor David Axelrod criticized Hillary Clinton on the same grounds: "She said, ‘I will...garnish people's wages if they don't sign up for this health care plan'...Her mandate is a mandate on people to buy health insurance." How is "garnishing people's wages" to enforce an individual mandate not a tax increase on the middle class?
- All the Democrat bills include tax penalties, administered through the Internal Revenue Service, for individuals and families who do not purchase "government-approved" coverage. Page 29 of the Baucus bill would subject families with incomes higher than three times poverty to an "excise tax" of up to $3,800 per year. Likewise, page 167 of the introduced version of House Democrats' government takeover of care (H.R. 3200) includes the following language: "There is hereby imposed a tax" on individuals who do not purchase "government-approved" insurance-and neither the House nor the Senate bills exempt those with incomes under $250,000 from the penalties. How is what the legislation plainly calls a new tax on all Americans not purchasing "government-approved" insurance not a tax increase on the middle class?
- Senior Obama Administration officials have also dubbed government mandates to purchase insurance for what they are-tax increases. Chief Health and Human Services policy advisor Sherry Glied has previously written that a mandate has the potential to be a "very regressive tax, penalizing uninsured people who genuinely cannot afford to buy coverage." Moreover, the National Economic Council Director, Larry Summers, has also written that government mandates to purchase or provide various benefits "are like public programs financed by benefit taxes," and that most economists regard such mandates "as simply disguised tax and expenditure measures." How is what one of the Administration's own advisors called a "very regressive tax" not a tax increase on the middle class?
- The Baucus bill includes nearly $215 billion in tax increases on insurance companies who offer high-value insurance policies-which the President endorsed in his address to Congress. Both business and union groups alike are concerned that these taxes will be passed on to middle-class families in the form of higher premiums-exactly what candidate Obama criticized during his campaign as "taxing people's benefits." How is raising Americans' insurance premiums through indirect taxes on insurance companies, and then forcing all individuals to purchase this more expensive coverage, not a tax increase on the middle class?
- The Baucus bill also includes an additional $93 billion in "industry fees" on insurance companies, pharmaceutical companies, device manufacturers, and clinical labs. Many economists agree that some, if not most, of these tax increases will be passed on to consumers of all incomes. How are higher fees for life-saving medical services used by millions of Americans not a tax increase on the middle class?
Given the overwhelming arguments-from Administration officials, President Obama's prior statements, and the legislation itself-many may view the Democrat health "reform" agenda as imposing tens of thousands of dollars in tax increases on vulnerable middle-class families to fund a government takeover of health care.
For additional information, contact:
The House Republican Conference Policy Office