Wednesday, October 21, 2015

2016 Conservative Tax Plans: Trump vs. Carson

Placing Principles before Personalities ::

Every time in this century we've lowered the tax rates across the board, on employment, on saving, investment and risk-taking in this economy, revenues went up, not down. ~ Jack Kemp

:: By: Larry Walker, II ::

Dr. Ben Carson doesn’t really have a tax plan at all, yet he’s number 2 in the polls among conservative Republicans. On the other hand, Donald Trump has a very detailed tax reduction plan. In a nutshell, Trump’s plan eliminates taxes on individuals making less than $25,000 and on couples making less than $50,000, lowers the top marginal rate to 25%, just as Calvin Coolidge did under the 1924 Mellon Tax Bill, and lowers the top corporate tax rate to just 15%. It’s time for conservatives to grow up and start focusing on principles rather than personalities. Do that and Trump wins easily.

Dr. Ben Carson’s Tax Theory

Here’s the entirety of Dr. Ben Carson’s Tax Plan which may be found on his official website :

The American People Deserve a Better Tax Code

The current tax code now exceeds 74,000 pages in length. That is an abomination.

It is too long, too complex, too burdensome, and too riddled with tax shelters and loopholes that benefit only a few at the direct expense of the many.

We need wholesale tax reform.

And, we won’t get that from career politicians in Washington. They’re too deeply vested in the current system to deliver the kind of bold, fresh, new reforms that the American people are demanding.

We need a fairer, simpler, and more equitable tax system. Our tax form should be able to be completed in less than 15 minutes. This will enable us to end the IRS as we know it.

Yep, that’s it. Thus far, Dr. Carson has been able to skirt by without offering more than a shallow critique of the current tax system. His overly simplistic solution fails to address landlords, freelancers, investors, owners of pass-through entities, owners of multiple entities, corporations, trusts and estates, and the death tax to name a few. A simple tax form that takes 15 minutes might work for someone who receives one or two W-2 Forms, a pension, or Social Security benefits, but it’s not going to cut it for the varied real-life complexities that many Americans face in this day and age.

“It is too long, too complex, too burdensome, and too riddled with tax shelters and loopholes that benefit only a few at the direct expense of the many.” Yeah, yeah, that’s what they all say, but what’s Carson’s alternative? In an interview with FOX Business Network’s Stuart Varney, Dr. Carson elaborated on his tax proposal, stating that it would be based on the Old Testament Biblical principle of tithing. Great, just like the Israelites were commanded to do around the year 1300 B.C.

Dr. Carson stated: “You make $10 billion, you pay a billion. You make $10, you pay one [dollar]. [Of] course I would get rid of all the deductions and all of the loopholes but here’s the key, people, they look at a guy who put in a billion dollars, he’s got $9 billion left, that’s not fair -- we need to take more of his money. That’s called socialism. And what made America … a great nation was we had a very different attitude. We would say he just put in a billion dollars, let’s create an environment that’s even better for him so that next year he can make $20 billion and put in $2 billion. That’s how we went from nowhere to the pinnacle of the world in record time. And it’s growth, it’s not taking what’s there and dividing it up and making it smaller.”

According to Dr. Carson’s statement above, “What made America a great nation was we had a very different attitude… That’s how we went from nowhere to the pinnacle of the world in record time,” as if to say that America once had a flat-rate tax structure. But when was that? Perhaps he’s confusing America with pre-Christian Israel, because prior to 1861, and between the years 1873 and 1912, the U.S. government was funded strictly through customs duties and tariffs levied on imported goods.

And, although a 3% flat-rate tax was proposed under the Revenue Act of 1861, as a temporary means of funding the Civil War, no revenue was ever raised under the act, and it was quickly replaced by a progressive rate structure under the Revenue Act of 1862. At no time since the Revenue Act of 1913, and at no time prior, has the U.S. ever been funded by a flat-rate income tax. So where is Dr. Carson coming from?

Okay, so if you make $10, $10,000 or $25,000 under Dr. Carson’s arrangement, you’ll pay $1, $1,000 or $2,500 in taxes. Never mind that depending on the size of your family, after your living expenses have been met, you might not have a penny left wherewith to pay it. Yet this he fathoms as fair. And, according to Dr. Carson, his program is great if you make $10 billion a year, but that’s primarily because you’ll see a 49% reduction in your effective tax rate, from where it is today. But for those less fortunate, including the entire middle class, Carson’s theory will result in a massive tax hike.

Under Dr. Carson’s 10% Deal, individuals within the lowest, second, middle and fourth quintiles, that currently pay average effective individual tax rates of -7.5%, -1.3%, 2.4% and 5.8%, respectively, will see their tax rates rise by at least 72%, and by as much as 233%. Increasing the rate to 15% only compounds the problem. What’s wrong with this picture? Well, for one, the only growth it produces is among the uber-wealthy. In fact, it appears to be just another means of benefiting “only a few at the direct expense of the many” – a direct contradiction to his stated goal.

So let me get this straight. Under Dr. Carson’s tax program, those in the highest quintile, including billionaires, who currently pay an average effective tax rate of 14.2%, will receive a 30% to 49% tax cut, while those in the lower quintiles receive a 72% to 233% tax hike. And how is this supposed to help the economy? More importantly, how does it help you and me? Well, it doesn’t. What Dr. Carson’s strategy actually does is make the rich richer and the poor soul down to his last $10 a dollar poorer.

Carson mentions nothing about corporate tax reform, disincentivizing corporate inversions, balancing trade, growing the economy, or expanding the workforce. He claims his proposal will be revenue neutral, which is at best a farce, but even if it somehow were – why would anyone care? Dr. Carson’s approach ransacks the middle class, plunders the working poor, and only profits the wealthiest among us. It’s a strategy unworthy of consideration by serious-minded conservative voters, as in my opinion is the entire Carson candidacy. Phooey!

Donald Trump’s Tax Plan

Here’s an excerpt from Donald Trump’s Tax Plan which may be found on his official website :


The Goals of Donald J. Trump’s Tax Plan

Too few Americans are working, too many jobs have been shipped overseas, and too many middle class families cannot make ends meet. This tax plan directly meets these challenges with four simple goals:

  1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.

  2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.

  3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.

  4. Doesn’t add to our debt and deficit, which are already too large.

The Trump Tax Plan Achieves These Goals

  1. If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.

  2. All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.

  3. No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.

  4. No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.

Again, this is only an excerpt; you may read the rest of Trump’s detailed tax plan on his website: Trump – Make America Great Again!

Under the Trump Plan, those in the lowest quintile, and most in the second and third quintiles (depending on marital status) won’t pay any income taxes at all. This is brilliant, considering that as a whole it’s estimated that those making less than $50,000 currently receive back roughly $37 billion more from the government, each year, than they pay in (see table below). This is due to a series of redundant, and costly tax expenditures. Removing upwards of 75 million households from filing requirements actually amounts to savings of no less than $370 billion, in government speak.

When it comes to simplifying the tax code, eliminating the filing requirements of some 75 million households turns out to be a big money saver. It will directly reduce the processing and subsequent examination, by the Internal Revenue Service, of around half of all tax returns currently filed. Since most individuals under this threshold only file to receive refundable tax credits, or to determine that they don’t owe any taxes at all, and around 37% of all individual returns audited involve the Earned Income Credit, once Trump’s plan is implemented the size of the IRS may be reduced dramatically.

Under Trump’s plan, if you are single, the first $25,000 you earn won’t be taxable, and if you are married, the first $50,000 you earn will be exempt from taxes (see table below). This will amount to a huge tax cut for the many, at the expense of a few. Compared to Dr. Carson’s idea, where the government would get up to $2,500 or $5,000 from the same, Trump’s plan is a huge windfall for the working poor and middle class. Are you for lower taxes? Will this help you?

Trump’s plan lowers the top marginal tax rate to 25%, or to the same level imposed from 1925 to 1931 under the 1924 Mellon Tax Bill. So this is not a shot in the dark, but rather a return to policies the U.S. had in place during the Roaring Twenties, back when the country truly was great. Compared to the present tax code, Trump’s plan will reduce income taxes for a married couple making $85,000 per year from around $8,800 to just $1,500 (assuming taxable income of $65,000). Does this appeal to you? Is there some part of this plan that you don’t comprehend?

According to Trump, the huge reduction in rates will make many of the current exemptions and deductions unnecessary or redundant. “Those within the 10% bracket will keep all or most of their current deductions. Those within the 20% bracket will keep more than half of their current deductions. Those within the 25% bracket will keep fewer deductions. Charitable giving and mortgage interest deductions will remain unchanged for all taxpayers.”

Trump’s tax plan also reduces corporate taxes from a top rate of 39% to just 15%, making the U.S. one of the most attractive places to do business worldwide. But then he goes a step further, by applying the same 15% cap to income earned by freelancers, sole proprietors, unincorporated small businesses and pass-through entities (i.e. partnerships and s-corporations), which are all taxed at the individual level. According to Trump, these lower rates will provide a tremendous stimulus for the economy, as in significant GDP growth, a huge number of new jobs and an increase in after-tax wages for workers.

Finally, Mr. Trump’s plan eliminates the death tax, reduces or eliminates deductions and loopholes available to the uber-wealthy, phases out the tax exemption on life insurance interest for high-earners, ends the current treatment of carried interest for speculative partnerships, adds a one-time repatriation of corporate cash held overseas at a discounted 10% tax rate, ends the deferral of taxes on corporate income earned abroad, and reduces or eliminates corporate loopholes that cater to special interests.

Coupled with his well aired balanced trade initiative, which seeks to eliminate our ongoing trade deficits with China, Mexico, Japan and other nations, every true Conservative is forced to concede that Donald Trump has a viable solidly conservative plan for this economy, and is indeed a serious candidate. Like him or not, when you lay Donald Trump’s tax reduction plan next to Ben Carson’s tax the poor philosophy, it’s clear that only one has a workable plan. Dr. Ben Carson may be a nice man, but it’s time to admit that there isn’t any substance behind his shallow rhetoric. It’s time for Conservatives to stop focusing on personalities, and start taking Donald Trump and his policies seriously.

Wednesday, October 7, 2015

Top GDP Growth Rates in U.S. History

Trump’s Dynamic Growth Policies

:: By: Larry Walker, II ::

In an October 4, 2015 interview on Meet the Press, Donald Trump was asked which government programs he will cut so his tax reduction plan won’t blow a hole in the deficit.

Trump’s first response described how we are going to save a lot in administrative costs by exempting millions of Americans from filing income tax returns. Under his plan, single individuals making under $25,000 and couples making less than $50,000 will not owe any income tax, and will thus not be required to file tax returns. This totally makes sense to me, as I outlined a similar plan in a post entitled, Tax Simplification, Part II - Saving $1,756 Billion, Overnight. Although it’s only part of the answer, it may actually be a bigger deal than some imagine.

Next, Mr. Trump remarked that his dynamic revenue plan focuses on growth. “We’re going to grow the economy. If China grows at 7%, they’re having a terrible year. We’re saying we can’t grow at 3% or 4%.” Overriding the host’s rude interruptions, Mr. Trump continued, “If we do 6% or 7% under my plan, everybody benefits.”

Snarky host, Chuck Todd, blurted out, “We’ve never done [sic]; we’ve never had a year at 6% or 7%.”

Of course, the public should be aware of Mr. Todd’s background. Although he may sound like an economic expert to some, he actually attended George Washington University from 1990 to 1994, majoring in political science with a minor in music, but never graduated. He certainly lacks proficiency in matters involving business, economics, or finance.

Mr. Todd would have no idea that the U.S. economy has in the past grown at rates as high as follows:

  • 10.8% (1934)
  • 12.9% (1936)
  • 17.7% (1941)
  • 18.9% (1942)
  • 17.0% (1943)

He would likewise have no clue that, back in the good old days, the U.S. economy grew in the 7% to 8% range (see chart below):

  • 7.3% (1984)
  • 7.1% (1955)
  • 8.1% (1951)
  • 8.7% (1950)
  • 8.0% (1944)
  • 8.8% (1940)
  • 8.0% (1939)
  • 8.9% (1935)

In fact, Ronald Reagan was the last American president to put together a cogent pro-growth economic plan which thrust GDP above the 7.0% mark. Of course Mr. Todd could have looked this up before making a fool out of himself and NBC, but like many of his colleagues, he suffers from the recency effect. He is unable to see beyond the pathetic growth rates of -3.0% to 2.5%, which the U.S. has realized since 2009 (i.e. their new normal).

Mr. Trump continued to discuss how his tax plan will disincentivize corporate inversions (where U.S. companies move overseas to capitalize on lower tax rates and cheap labor). He described how his plan will incentivize U.S. companies to bring an estimated $2.1 trillion (or more) in profits held overseas back to the U.S. for domestic investment. Both policies work to raise GDP, expand the workforce and boost tax revenues.

Trump also discussed his plan to balance our longstanding trade deficits with China, Mexico, Japan and other nations through imposing a scaled tariff. Since over the last decade, trade deficits with the three named countries alone amount to $2.7 trillion, $602.6 billion, and $716.5 billion, respectively, Trump’s balanced trade initiative could add another $4.1 trillion to the national economy.

Mr. Todd continued to interrupt, “We still have a hole in the deficit that this tax plan blows open; unless you tell us what you’re cutting.” Of course this is a classic gotcha question, since most liberals view cutting anything, even waste, fraud and abuse, as a negative.

Given the anemic growth rates he and other liberals are accustomed to, failing to account for the $1.8 trillion saved by exempting millions from income tax filing requirements, and gains realized through disincentivizing corporate inversions, recovering overseas profits, and balancing trade, Chuck Todd concluded that Donald Trump’s tax plan may add as much as $10 trillion to the debt over 10 years.

To this, Mr. Trump simply reiterated, “If we can get it (i.e. the growth rate) up to 5% or 6% it’s a huge difference.”

Mr. Todd again interrupted, “Okay, 6% is something we have not done.”

Trump refuted, “Well, we used to do it in the old days.”

It turns out that Mr. Todd is wrong, and that Mr. Trump, who has the kind of thinking America needs to solve its trade, growth, and debt problems, is correct. The chart here shows U.S. GDP growth rates from 1930 through 2014. Growth of 6% or more has been achieved numerous times in the past and is entirely possible in the future. The first step in getting there is to stop listening to know-nothing media pundits. The second step is to elect a president with notable acumen in financial matters.

“Solving a multi-trillion dollar problem just may require the mind of a billionaire.”


Data Worksheet

Bureau of Economic Analysis - Interactive Data

30-Year Trade Deficit with Mexico

30-Year Trade Deficit with China

Tax Simplification, Part II - Saving $1,756 Billion, Overnight

Big U.S. firms hold $2.1 trillion overseas to avoid taxes: Study

An Economic Program for Stimulating U.S. Economic Growth

Saturday, September 19, 2015

30-Year Trade Deficit with Mexico

Trump Nails It

- By: Larry Walker II -

Last year our trade deficit with Mexico totaled $53.8 billion, and is projected to end about the same in 2015. When the last three decades are summed, we find that the United States 30-year trade deficit with Mexico amounts to $910.2 billion. Although this has been great for Mexico, it hasn’t been so great for the United States.

Looking back over the last 30 years, we find that the United States actually ran trade surpluses with Mexico in 1991 through 1994, and then came the North American Free Trade Agreement (NAFTA - 1994). Since NAFTA, the United States annual trade deficits with Mexico have totaled $897.8 billion (since 1995). By comparison, the deficit amounted to just $13.7 billion during the 9 years preceding NAFTA.

U.S. Trade Deficit with Mexico (1985 to 2015)

2015 $31.2 billion (through July)

2014 $53.8 billion

2013 $54.5 billion

2012 $61.7 billion

2011 $64.6 billion

2010 $66.3 billion

2009 $47.8 billion

2008 $64.7 billion

2007 $74.8 billion

2006 $64.5 billion

2005 $49.9 billion

2004 $45.2 billion

2003 $40.6 billion

2002 $37.1 billion

2001 $30.0 billion

2000 $24.6 billion

1999 $22.8 billion

1998 $15.9 billion

1997 $14.5 billion

1996 $17.5 billion

1995 $15.8 billion

1994 ($1.3) billion (surplus)

1993 ($1.6) billion (surplus)

1992 ($5.4) billion (surplus)

1991 ($2.1) billion (surplus)

1990 $1.9 billion

1989 $2.2 billion

1988 $2.6 billion

1987 $5.7 billion

1986 $4.9 billion

1985 $5.5 billion

Not only are we losing in trade with Mexico, but the Mexican government has allowed millions of its own citizens, and those from nations to its south, to pour over our southern border illegally. That’s right! The Mexican government has been mostly complicit, looking the other way while tens of thousands boarded trains from its southernmost to its northernmost border, allowing them to cross our border without any resistance. Although lately Mexico claims to be clamping down on illegal border crossings, the damage has already been done.

There are folks both left and right who say, “Free-trade is good for America, because it allows us to work less and buy cheaper goods.” Although plausible on paper, the theory fails once we tally the last thirty years results. Looking back over the last 30 years, we discover that not only has the U.S. lost nearly $5.0 trillion in national wealth ($4 trillion to China and $1 trillion to Mexico alone), but according to the Bureau of Labor Statistics, manufacturing jobs in the U.S. have declined from 18.0 million in 1985 to just 12.3 million as of August 2015.

According to Raymond Richman (Ph.D. in Economics from the University of Chicago and Professor Emeritus of Public and International Affairs at the University of Pittsburgh), “We should end our huge chronic trade deficits which have decimated our manufacturing sector and caused the loss of millions of good American manufacturing jobs. Our policy should be balanced trade which economic theory supports rather than free trade which is supported by economic theory only when countries have a common currency and free movement of capital and labor (as among the States of the United States). We should use the “Scaled Tariff” (our invention!), a single-country-variable-tariff that rises as trade deficits widen significantly, whatever the reason, and are reduced to zero as trade is brought into balance.”

Once aware that our flawed trade policy has resulted in the siphoning away of more than $5 trillion in national wealth ($1 trillion to Mexico alone) and 6 million manufacturing jobs, it should be easy to understand how Mexico will pay for the new border wall. Mr. Trump has his finger on two of the most glaring problems with our economy, illegal immigration and our Lose-Lose foreign trade policy. Balancing our trade deficit, by any means necessary, is a vital component in the quest to make America great again.


An Economic Program for Stimulating U.S. Economic Growth

30-Year Trade Deficit with China - Maybe Trump Gets It

U.S. Census Bureau – Trade in Goods with Mexico

Bureau of Labor Statistics – CES Establishment Data - Manufacturing

U.S. Census Bureau – Income and Poverty in the United States: 2013

Sunday, September 13, 2015

30-Year Trade Deficit with China

Port of Savannah

Maybe Trump Gets It

-By: Larry Walker II-

This year-to-date, the United States has imported $267.7 billion in goods from China, while exporting just $65.4 billion in goods to China. That amounts to a current year trade deficit of $202.3 billion, in the first seven months alone. Looking back over the last 30 years, the last time our mutual trade comprised any semblance of balance was in 1985.

Our trade deficit with China was a mere $6.0 million in 1985 (the last time it would amount to less than a billion dollars). From a trade deficit of just $6.0 million in 1985, the imbalance suddenly jumped to $1.7 billion by 1986. It has grown progressively worse almost every year since. Last year our trade imbalance with China reached a record $343.1 billion, and it is projected to end higher this year.

When the last three decades are summed, we find that the United States 30-year trade deficit with China amounts to $3.9 trillion. To top it off, the imbalance is clearly growing worse year by year. Although this has been great for China, it hasn’t been so great for the U.S.

U.S. Trade Deficits with China (1985 to 2015)

2015 $202.3 billion (through July)

2014 $343.1 billion

2013 $318.7 billion

2012 $315.1 billion

2011 $295.2 billion

2010 $273.0 billion

2009 $226.9 billion

2008 $268.0 billion

2007 $258.5 billion

2006 $234.1 billion

2005 $202.3 billion

2004 $162.3 billion

2003 $124.1 billion

2002 $103.1 billion

2001 $83.1 billion

2000 $83.8 billion

1999 $68.7 billion

1998 $56.9 billion

1997 $49.7 billion

1996 $39.5 billion

1995 $33.8 billion

1994 $29.5 billion

1993 $22.8 billion

1992 $18.3 billion

1991 $12.7 billion

1990 $10.4 billion

1989 $6.2 billion

1988 $3.5 billion

1987 $2.8 billion

1986 $1.7 billion

1985 $6.0 million

There are folks on both the left and right who say, “Free-trade is good for America, because it allows us to work less and buy cheaper goods.” Although it may be true that free-trade allows us to purchase more goods at lower prices, a problem arises when the exchange is so grossly out of balance. Although plausible on paper, the theory fails once we tally the last thirty years results. Looking back, we discover that not only has the U.S. lost $3.9 trillion in wealth (with just one country), but according to the Bureau of Labor Statistics, manufacturing jobs in the U.S. have declined from 18.0 million in 1985 to just 12.3 million as of August 2015.

The idea of working less and being able to buy cheaper goods might sound great to someone who’s working their behind off and doing well, but not so much for those forced to sit on the sidelines. As I recently commented on an Anti-Trump Trade Policy Video, “How is the guy, in your example, supposed to go to Wal-Mart to buy an imported Chinese TV, if he has no job and is stuck on food stamps, unemployment or welfare? And, why is the poverty rate in the U.S. higher than it was 30 years ago?”

If you think a policy resulting in the siphoning away of $4 trillion in national wealth and 6 million manufacturing jobs is somehow winning, then perhaps that’s why you’re not. Maybe Mr. Trump is more knowledgeable than thou, at least when it comes to the economy.


U.S. Census Bureau – Trade in Goods with China

Bureau of Labor Statistics – CES Establishment Data - Manufacturing

U.S. Census Bureau – Income and Poverty in the United States: 2013

Friday, July 3, 2015

North Carolina Sharks in Marine Protected Area

Mid-Atlantic Shark Area

Swim At Your Own Risk

:: By: Larry Walker II ::

If you follow the mainstream media, you would think the recent surge in shark attacks off the North Carolina coast is due to unusually warm water, a lack of rain causing increased salinity, or because more people are in the water than ever before, all of which is nonsense.

In other words, they don’t have a clue. It might be more helpful to the public if the mainstream media simply stated the obvious and moved on to its next barrage of misinformation.

So what is causing the uptick in the number of coastal North Carolina shark attacks? Well, unbeknownst to many, the area just off the North Carolina coastline is known as the Mid-Atlantic Shark Area (pictured above). And as if this isn’t clue enough, it also happens to be the most protected marine area in the United States.

According to the Marine Conservation Institute, “The area includes Essential Fish Habitat and Habitat Areas of Particular Concern for sandbar and dusky sharks, serving as nursery and pupping areas for these species. The area is closed to vessels using bottom longline gear from January 1 through July 31.” And according to the National Marine Fisheries Service (NMFS), a division of the National Oceanic and Atmospheric Administration (NOAA), fishing of Atlantic Sharpnose, Blacknose, Blacktip, Bull, Tiger and other Shark species is strictly off limits in this area.

Sorry to break the news, but since no one is allowed to fish and therefore contain this shark infested region for the first seven months of every year, nor allowed to capture the most dangerous shark species thereafter, if one wishes to visit a beach in early Summer (for recreational purposes), their last destination of choice ought to be the North Carolina coastline.

Why are sharks important ecologically? According to the Virginia Institute of Marine Science, “Sharks sit atop the food chain as apex predators. As such, they play an important ecological role in keeping prey populations healthy by removing weak, old, and infirm individuals. When shark populations decline due to over-fishing and habitat loss, prey populations can increase unchecked, leading to an overall decline in ecosystem health.”

Great, but then who’s supposed to keep shark populations in check, the federal government? Yeah, right! If you’re sitting around waiting on them to act, it might help if you woke them up first.

Sunday, May 31, 2015

Affordable Care Excise Tax, Part IV

What Marketplace?

:: By: Larry Walker II ::

“Putting thoughts into words is vastly different from putting truth into words. For words are not truth. As ardently as writers sort and select and polish their words, at the end of the day they are still words. They are not, in themselves, truth...” ~ Lionel Fisher

The act of naming the federal government’s unlawfully subsidized website an “Exchange” or “Health Insurance Marketplace” doesn’t make it one. In a true marketplace, when a product or service is inadequate new competitors are allowed to step in and offer something better. But free competition is stifled when a government controlled, crony capitalist managed, overpriced monstrosity places rigid restrictions on the types of products and services offered. This is precisely the case with the health insurance plans offered by the U.S. government’s imaginary marketplace.

The federal government should do away with the individual mandate, including the vile affordable care excise tax, and open the “marketplace” to catastrophic plans. What kind of marketplace bars consumers from choosing between all possible options, and then imposes a tax for failing to make a purchase? That would be a government-run marketplace.

What is a Catastrophic Health Care Plan?

According to the federal government catastrophic health care plans are meant to provide protection from worst-case scenarios. They generally require you to pay all of your medical costs up to a certain amount (i.e. a deductible), which is usually several thousand dollars. Also according to the government, “they are basically the same as either not having insurance, or opting for a Bronze plan.” A statement that reveals something many have already discovered regarding the latter.

After reaching your deductible, costs for essential health benefits are generally paid by the plan. But here’s the key; catastrophic plans have lower monthly premiums than comprehensive plans. Although they primarily protect you from worst-case scenarios like serious accidents or illnesses, they also cover 3 primary care visits per year at no cost, even before you’ve met your deductible. They also cover free preventive services. Such features make them better than most comprehensive options.

As the law stands today, only U.S. residents under the age of 30 are allowed to purchase low-priced catastrophic health care policies. Those age 30 and over are out of luck, unless they have applied for and received a government approved hardship exemption. Those over the age of 30 aren’t even allowed to view the costs and benefits of such plans until they have obtained the burdensome bureaucratic sanctioned privilege.

Small Business Owners

Many Americans have money tied up in small businesses. The fact that some receive K-1 Forms from S-corporations or partnerships, reporting that they earned “X” amount of dollars, doesn’t mean they actually received a dime. Yet they are forced to pay income taxes on such earnings whether or not physically received. This is hardly fair, but now it’s worse.

If forced to remove all, or even a portion, of their earnings (or capital) from such enterprises each year, in order to comply with the Individual Mandate, many small business owners may not have sufficient funds to cover upcoming salaries, payroll taxes, debt service payments, general operating expenses, and income taxes. For these, catastrophic health insurance plans may be the best option.

Most Democrats are clueless about what I just said. Knowledgeable Democrats and unelected bureaucrats will say, “No problem, just fill out a 14 page hardship application, attach copies of your personal and business tax returns (and all other required backup documentation), and the federal government will get back to you and let you know whether or not you qualify for a catastrophic plan.” However, if a bureaucrat decides you can afford it, then you’ll either need to purchase an overpriced government approved plan, or pay the affordable excise tax.

The federal government doesn’t have a problem reducing any American to the level of a means-tested welfare program applicant, but resource allocation decision makers should. Are small business owners working 12 to 18 hour days to be treated like welfare applicants? I think not. They shouldn’t need a bureaucrat’s permission to purchase whatever type of health insurance meets their needs, and if none of the available options fit, they should be free to go without (i.e. free from a punitive excise tax).

Individual Market

If you’re single and think you might be able to afford up to $6,300 in medical bills each year (the bronze plan deductible for individuals), but are not sure you would be able to after having already forked over five thousand dollars (or so) in government mandated health insurance premiums upfront, you’re not alone.

If you’re married and not sure whether you could manage $12,600 in medical bills annually (the bronze plan deductible for couples), but are fairly certain you would not be able to after having been forced to pay ten thousand dollars (or so) in government-mandated health care premiums upfront, you’re not crazy.

Exorbitant health insurance deductibles, $6,300 for singles and $12,600 for families, coupled with pricey monthly premiums are precisely Obamacare’s problem, not to mention the unconscionable excise tax levied for noncompliance. The federal government may have forgotten that it already snatches 17% to 50% of its most productive citizen’s income each year, in the form of Social Security taxes, Medicare taxes, excise taxes and income taxes, but those affected by such and also subject to the Individual Mandate have not.

It’s been reported that middle class Americans, those most affected by Obamacare’s inflated premiums, are beginning to skip medical checkups and scrimp on their own health care, because once the premiums have been paid there isn’t much of anything left to cover the associated deductibles and out-of-pocket expenses dictated by an out of touch overlord.

Millions of middle class Americans don’t need to break their piggy banks trying to comply with the individual mandate, to know they would be forced to cut back on their own personal health care. After having wasted thousands of dollars a year to satisfy the Democratic Party’s seemingly drunken delusion, that every U.S. resident can afford health insurance, what they will be left with is a worthless insurance policy, not better health care.

To spell it out in terms anyone should be able to understand: Gross income minus federal and state income taxes, Social Security and Medicare taxes, rent or mortgage payments, utility bills, car payment(s), auto insurance, auto fuel and maintenance, debt service, food, clothing and personal expenses, retirement savings, and other family obligations, equals next to nothing for most of America. Yet, being well aware of this, the Democratic Party made the purchase of what it calls “minimum essential coverage” mandatory.

Quid Pro Quo

To better visualize the idiocy of Obamacare let’s compare it to a vehicle service contract and extended warranty. I recently purchased the package on a new vehicle. It covers the first five years or 60,000 miles for a one-time premium of $5,000. The cost was fairly steep, but what do I get in return?

When my truck needs an oil change, any regularly scheduled maintenance, or if any part fails, it’s covered. There are no deductibles or out-of-pocket costs. In other words, I don’t have to worry about shelling out another dime for nearly any situation which may occur with the truck over its first 5 years, or 60,000 miles. Not bad.

In comparison, an Obamacare bronze plan would cost me around $5,000, each and every year, subject to annual inflation increases. In addition, I would be forced to cover the first $6,300 I incur in medical expenses (the deductible), each and every year out of my own pocket. So over a five year period, I am expected to cover $25,000 in Obamacare premiums (subject to inflation), plus another $31,500 in out of pocket costs. Had this been the case with my truck, I would have bit the bullet.

Although a human being, at least in Western civilized society, is in theory worth more than a vehicle, that doesn’t mean a single middle class American can magically come up with $56,500 ($113,000 for a married couple), over a five year period, to comply with the Democratic Party’s pipe dream. Yet, for middle class taxpayers in their 50’s that’s what Obamacare demands. Let me check my bank book and see if I’ve got an extra $56,500 lying around from the last five years. What about you?

When it comes to getting something for something, that’s not what we find when it comes to the individual mandate. Thanks, but I’ll take a pass on Obamacare. Anyone that thinks this is a rational plan was either already covered by a governmental or employer health care plan, or is pitifully out of touch with reality. But this is always the case with big government programs run amok. Unless a program affects people in a personal manner, most tend to be idealistic or apathetic.

Fixing Obamacare

As revealed in Part III, in spite of Obamacare, 30 million U.S. residents are projected to remain uninsured indefinitely. Among them, 26 million are expected to claim an exemption from the penalty. Did I say penalty? Sorry, I meant excise tax. In its present form, the law is without question a colossal failure, and ignoring the results of the most recent landslide election would be a monumental miscalculation.

Government intervention in the health insurance market, in the form of excise taxes, tax credits, subsidies and regulations has led to the unintended consequences of artificially high insurance premiums and lofty deductibles. Imposing an excise tax on consumers least able to comply with the mandate, forcing them to choose between purchasing an overpriced policy or paying a tax, has created another unintended consequence – animosity toward one’s own government.

How can we amend this broken concept?

  1. The federal government should simply drop its individual mandate and let the market operate freely. That means no subsidies and no excise taxes.

  2. Then, it should allow anyone desiring to purchase a catastrophic health insurance policy the right to do so, regardless of age or household income.

Any hope of reducing costs, restoring national allegiance, and encouraging the uninsured to enter (or reenter) what used to constitute a health insurance marketplace rests on this combination. If the federal government is sincerely concerned with the welfare of all of its citizens and residents, it will repeal the individual mandate and establish a true marketplace.

The End; hopefully of Obamacare.


Affordable Care Excise Tax, Part I

Affordable Care Excise Tax, Part II

Affordable Care Excise Tax, Part III


Picture credit: Emergency Physicians Monthly

Thursday, January 22, 2015

Affordable Care Excise Tax, Part III

Paying Your Fair Share

:: By: Larry Walker II ::

In Tax Simplification, Part II, I expounded on a 2010 Annual Report to Congress, in which National Taxpayer Advocate Nina E. Olson focused on the need for tax reform as the No. 1 priority in tax administration. In particular, she focused on the problem of delivering social benefits through the tax system, which complicates the mission of the Internal Revenue Service (IRS), resulting in a dual mission of welfare administration as well as revenue collection. But instead of taking heed, the federal government doubled down, adding a new health care excise tax and health insurance premium tax credit to the IRS’s burden.

Telephone hold times with the IRS can sometimes run as long as four to seven hours these days, and if you don’t believe me try calling yourself. A taxpayer facing a federal tax lien, levy or wage garnishment doesn’t have a choice. He or she must call immediately in order to prevent an adverse action, but unless they have a day to spare and a very powerful battery, may wind up on the phone for several days just trying to get someone on the line. The federal government has taken an agency best suited for revenue collection, and turned it into a socialist style welfare office, long lines and all.

In Part 2, I affirmed that the shared responsibility payment isn’t a fee, because nothing is received in return. Nor is it a penalty, because failure to purchase health insurance doesn’t constitute a crime. The individual shared responsibility provision imposes an excise tax on a tiny minority of U.S. residents who don’t have government-mandated health insurance or qualify for one of several exemptions. Although Internal Revenue Code – Section 5000A refers to it as a penalty, in general, if it involves filling out a federal income tax form (i.e. Form 8965), and is assessed on and payable with your personal income tax return, it’s a tax.

Opting Out

Many U.S. residents opted out of government mandated health insurance last year. Most simply couldn’t handle the government dictated concoction of monthly premiums and annual deductibles. For these, the Affordable Care Act’s punitive excise tax only makes matters worse. To those affected by this odious tax, it represents a discriminatory confiscation of wealth they are least likely to possess.

For example, the lowest cost Bronze Plan in the state of Georgia currently costs a married couple in their late 40’s to early 50’s (without children and with annual income of around $80,000) a monthly premium of around $622. Conjoined with an annual deductible of $12,600, their insurance policy won’t cover a dime of medical expenses until they have exhausted slightly over a quarter of their annual income ($20,064 / $80,000).

If the couple reasons that they may be able to afford the first $7,464 in medical bills, but would be screwed if they had to pay an additional $12,600, they would be better off not wasting their money on insurance premiums. Once having come to this conclusion, in steps the government to impose the execrated tax. The couple is then forced to hand over 1% of their income (above the filing threshold) in 2014, 2% in 2015, 2.5% in 2016, and more thereafter.

In this example, the government-inflicted excise tax is meant to encourage, or if you will, coerce the couple into purchasing a service they deemed impractical from the get go. But will it? Since the problem boils down to its exorbitant overall cost, how does a government imposed tax of $597, $1,194 or $1,493 help this couple? Newsflash: It doesn’t. Taking money away from one middle class taxpayer and handing it to another serves no meaningful purpose.

What is the purpose?

The premise behind the Affordable Care Act (ACA) was originally as follows: Too many Americans are being denied access to medical care. Health care is a fundamental right for every American. Therefore, every American should have universal access to health care. Anything less is immoral. Yet, in spite of an unprecedented level of government intervention, according to the Congressional Budget Office (CBO), roughly 30 million nonelderly U.S. residents will remain uninsured in 2016, and every year thereafter.

One critical detail, virtually forgotten in its more than 20,000 pages of regulations, is that prior to implementation of the ACA, 42 million U.S. residents were uninsured, according to an annual report from the U.S. Census Bureau. And now, after upending the entire American health care system, and throwing another monkey wrench into U.S. tax administration, come to find out that 71% of them will remain uninsured for the duration.

But at least 12 to 13 million got covered, right? Well perhaps, but not without taxpayer assistance, or what’s known in the real world as additional government debt. According to the Heritage Foundation, roughly 6 million of the newly insured were added to taxpayer-funded Medicaid programs. And according to H&R Block, the other 6.8 million purchased health insurance, but only after employing taxpayer-funded subsidies (i.e. premium tax credits).

In short, 30 million of the 42 million who were uninsured prior to the ACA will remain uninsured in 2016 and every year thereafter. And, of the 12 to 13 million newly insured, every last one received a taxpayer handout. What’s up with that? Couldn’t we have achieved the same result without maiming the tax code?

Ironically, and according to the U.S. Census Bureau, around 30 million U.S. residents, age 18 or older, never made it past the 11th grade, but that’s another story. Although not likely the same 30 million who will never have health insurance (because they get theirs for free), you can bet Progressive’s will constantly characterize them as hard-working Americans worthy of evermore governmental assistance (i.e. a higher minimum wage, free child care, free junior college, free health care, etc… etc…)

Right, so they didn’t make it past the 11th grade, but now it’s our job to hand them a free ride? Are you kidding me? These are not hard-working Americans; they are society’s losers. Close to half probably aren’t even legal. Oops! The notion of robbing the middle class, in order to dole out freebies to a bunch of flunkies is absurd. If you want something in life, work for it like the rest of us. But I digress. The affordable excise tax, being levied against the true middle class, is damnable.

Are you paying your fair share?

Now get this. Of the 30 million (or so) who will remain eternally uninsured, the majority are expected to be exempt from the new excise tax. That’s right! Despite the federal government’s ultimatum, the CBO estimates that 23 million will qualify for one or more of the following exemptions:

  1. Not lawfully present. Any individual who is neither a U.S. citizen, U.S. national, nor an alien lawfully present in the U.S. If you are in the U.S. illegally, then according to the law you are exempt.

  2. No filing requirement. An individual whose household income is below the minimum threshold for filing a tax return. The requirement to file a federal tax return depends on filing status, age, and types and amounts of income. If you are not required to file a return, then no other action is required.

  3. Income below the federal poverty level. You were determined ineligible for Medicaid because your state didn't expand eligibility for Medicaid under the Affordable Care Act.

  4. Plans are unaffordable. You have no affordable coverage options because the minimum amount you must pay in annual premiums is more than 8% of your household income.

  5. Indian tribes. Any member of a federally recognized Indian tribe. You may claim this exemption directly on your tax return through self-attestation.

  6. Incarceration. Any individual in jail, prison, or a similar penal institution or correctional facility. You may claim this exemption through self-attestation when you fill out your federal tax return.

For more on exemptions, see Part 2. So in the year 2016, only around 7 million of the 30 million uninsured will have to deal with this new excise tax, in one fashion or another. The CBO estimates that among the 7 million, 3 million will either request hardship exemptions, or simply refuse to pay (i.e. take advantage of the IRS’s inability to administer and collect the tax).

All in all, the CBO believes a mere 4 million hapless Americans will be forced to fork over an estimated $4 billion in affordable care excise taxes in the year 2016. The figure climbs to an estimated $5 billion a year from 2017 to 2024. Note: The CBO neglected to offer estimates for tax years 2014 and 2015, which will likely involve higher numbers subject to the tax due to novelty of the law.

In brief, 4 million pay, while 26 million get a pass. Well, so much for the vaunted Fair Share theory! Perhaps all should be granted immunity, or at least an opportunity to purchase catastrophic health insurance policies, as I pleaded for in Part 1.

Squashing the Real Middle Class

Among the doomed 4 million (i.e. those subject to the affordable care excise tax), the CBO estimates that roughly 74% will be from what many consider to be the middle class (i.e. income exceeds 200% of federal poverty guidelines), with the remaining 26% in the low income category (i.e. income below 199% of federal poverty guidelines).Great!

So by the year 2016, out of 30 million perpetually uninsured Americans, comprising roughly 10% of the population, only 4 million, or just over 1% of the population, will be forced to pay what the Supreme Court said, “…may reasonably be characterized as a tax.” The bulk of the disheartened will represent the middle class, with a minority from the lower middle class. Wow!

Prior to the ACA, 42 million U.S. residents were uninsured. Following its implementation, 30 million, or 71%, will remain uninsured indefinitely. Of the 12 to 13 million newly insured, every single one is on the government dole, either through free Medicaid or subsidized health insurance premiums. In 2016, 4 million uninsured American citizens will be forced to hand over 2.5% of their income to the federal government in exchange for nothing, while another 26 million, in essentially the same boat, will remain uninsured but at least suffer no further humiliation. So the U.S. is finally taxing the 1%, eh?

Although the ACA focuses its excise tax on a tiny fraction of permanently uninsured Americans, at the same time it provides subsidies for people making up to four times the federal poverty line (i.e. $46,680 for a single person, $62,920 for a family of two, and $95,400 for a family of four). Can you say overpriced? As a general rule, when a product or service is subsidized it’s being sold at a premium (i.e. the insurance is overpriced). But not to worry, the ACA’s premium tax credits turn out to be a load of bull as well.

According to the Washington Examiner as many as 3.4 million of the 6.8 million who received taxpayer subsidized health insurance may owe money back to the federal government. H&R Block estimates that as many as half of the 6.8 million people who received insurance premium subsidies under the ACA benefited from subsidies that were too large. Oh, for crying out loud!

At this point, if you’re a left-winger you’re probably thinking, “Yippee, we did it!” If you’re conservative you’re likely saying, “I told you so.” And if you find yourself in the crosshairs of the affordable excise tax, you’re probably muttering words you dare not convey in public.

To be continued…


Affordable Care Excise Tax, Part I

Affordable Care Excise Tax, Part II

Affordable Care Excise Tax, Part IV


Wednesday, January 7, 2015

Affordable Care Excise Tax, Part II

Effing the Middle Class

:: By: Larry Walker II ::

In Part 1, we voiced concern that in constitutional law sense, an excise tax is usually an event tax as opposed to a “state of being” tax, the recent exception to this principle being the "minimum essential coverage" tax under Internal Revenue Code section 5000A as enacted by the Patient Protection and Affordable Care Act (Public Law 111–148), whereby an indirect tax is imposed on the condition of not having purchased health insurance coverage.

This is not the first time in history the United States has forced its middle class to pay a tax supposedly for our common good; Social Security and Medicare taxes come to mind. However, this is the first time the federal government has ordered its middle class to either engage in an act of commerce, or else hand over a percentage of its hard earned income.

Nearly 18 million state and local government employees as well as a few conscientious religious objectors are exempt from Social Security taxes, while the rest of us are bound to a sinking ship. Is it fair that millions of Americans get a better deal, while the masses are forced to contribute to the welfare of others?

Under the Affordable Care Act it's worse. Those who voluntarily purchase private company health insurance plans, predetermined by the federal government as meeting their needs, and deemed affordable to them based on contrived criteria, are allowed to escape the new tax, while those in need (i.e. stuck in the middle and still uninsured) get screwed.

If the principle behind the affordable care tax were applied consistently across the board, then those participating in qualified retirement plans should be exempt from Social Security tax, and owners of long-term care insurance contracts should be excluded from Medicare tax. This would be fair and equitable, but as it stands the new tax represents a major departure from Americanism.

Under this latest departure from common sense, the poor receive free health care through state-run Medicaid programs, the rich can handily afford the best of insurance plans, and the middle class are either stuck with high premiums compounded by soaring deductibles, or slapped with an excise tax for not purchasing a government mandated plan.

Members of the middle class, and those once aspiring, who refuse on principle, or are for myriad reasons unable to purchase a government mandated health insurance plan, and not meeting one of several exemptions, are subject to this new “state of being” tax. In other words, the state of being stuck between a rock and a hard place makes the middle class a prime target for funding government subsidies to the poor.

If you and your family did not have minimum essential coverage in 2014, you will need to meet a specific exemption to avoid paying the new excise tax. If you would like to obtain coverage for 2015, the deadline for doing so is February 15, 2015. To obtain coverage, your options include:

  • Health insurance provided by your employer;

  • Health insurance purchased through the Federal website (, or your State’s Marketplace;

  • Coverage provided under a government sponsored program (i.e. Medicare, Medicaid, Veterans Administration);

  • Health insurance purchased directly from an insurance company; or

  • Other health insurance coverage that is recognized by the Department of Health & Human Services.

Who is exempt?

The Affordable Care Act mandates individuals without health insurance to pay an excise tax on top of their regular federal tax obligation, however there are exemptions. If you are exempt from the requirement to maintain minimum essential coverage, the excise tax won’t apply when you file your 2014 federal tax return. An exemption may apply if you meet one of the following criteria:

  1. You have no affordable coverage options because the minimum amount you must pay in annual premiums is more than 8% of your household income; or

  2. You have a gap in coverage for less than three consecutive months; or

  3. You qualify for one of the hardship exemptions listed below, or belong to an exempt group (explained later).

Numbers 1 and 2 (above) may be claimed directly on your income tax return, but a hardship exemption (number 3) must be approved by a government bureaucrat. To claim a hardship exemption, you must complete and mail an application to what’s being called the Health Insurance Marketplace (i.e. the federal government). Upon approval, you will receive an "exemption certificate number" (ECN), which must be included on your tax return to receive the exemption.

Please be aware, that if you do not qualify for exemption numbers 1 and 2 (above), and think you may qualify for one of the following hardship exemptions, the time to submit an application is now. If you wait until tax season, the filing of your tax return may be delayed (awaiting receipt of an ECN), or you may have to file without an exemption and amend your return later. Choosing the latter will affect the amount of your refund or balance owed.

If any of the following hardships apply to you, you must submit an application for exemption as discussed in Part 1:

  1. You were homeless.

  2. You were evicted in the past 6 months or were facing eviction or foreclosure.

  3. You received a shut-off notice from a utility company.

  4. You recently experienced domestic violence.

  5. You recently experienced the death of a close family member.

  6. You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.

  7. You filed for bankruptcy in the last 6 months.

  8. You had medical expenses you couldn't pay in the last 24 months that resulted in substantial debt.

  9. You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.

  10. You expect to claim a child as a tax dependent who's been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, you don't have the pay the penalty for the child.

  11. As a result of an eligibility appeals decision, you're eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren't enrolled in a QHP through the Marketplace.

  12. You were determined ineligible for Medicaid because your state didn't expand eligibility for Medicaid under the Affordable Care Act.

  13. Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.

  14. You experienced another hardship in obtaining health insurance.

If any of the 14 hardships (above) apply to you, and you wish to be excluded from the affordable excise tax, then you must submit a hardship application, along with proper documentation supporting your claim. If approved, you will be granted an ECN to enter on your tax return. Good luck with that. If denied, you may need to pay the tax, or if you are expecting a refund the IRS will conveniently subtract it out.

Exempt Groups: The following individuals are exempt from coverage:

  1. Religious conscience. Any member of a religious sect that is recognized as conscientiously opposed to accepting insurance benefits. The Social Security Administration administers a similar process allowing exemption from Social Security and Medicare taxes. You must submit an application to claim this exemption.

  2. Health care sharing ministry. Any member of a recognized health care sharing ministry. Health care sharing ministries (HCSM) provide health care cost sharing arrangements among persons of similar and sincerely held beliefs. HCSMs are operated by not-for-profit religious organizations acting as a clearinghouse for those who have medical expenses and those who desire to share the burden of those medical expenses. You may claim this exemption directly on your tax return through self-attestation.

  3. Indian tribes. Any member of a federally recognized Indian tribe. You may claim this exemption directly on your tax return through self-attestation.

  4. No filing requirement. An individual whose household income is below the minimum threshold for filing a tax return. The requirement to file a federal tax return depends on filing status, age, and types and amounts of income. If you are not required to file a return, then no other action is required.

  5. Incarceration. Any individual in jail, prison, or a similar penal institution or correctional facility. You may claim this exemption through self-attestation when you fill out your federal tax return.

  6. Not lawfully present. Any individual who is neither a U.S. citizen, U.S. national, nor an alien lawfully present in the U.S. If you are in the U.S. illegally, then according to the law you are exempt. Well, imagine that.

You’ve Been Grubered

The affordable excise tax maxes out at 1% of household income (above the filing threshold) in 2014, increases to 2% in 2015 (i.e. a 100% increase), then to 2.5% in 2016 (i.e. an additional 25% hike) and is automatically adjusted for inflation thereafter. What’s the rationale behind the dramatic rate of increase? Is inflation expected to rise by 100% in 2015 and by another 25% in 2016? Are middle class wages expected to grow at anywhere near this clip?

You’ve got to give it up for the Grubers (i.e. Democrats), for pulling the wool over our eyes and sneaking this baloney into law. As if their deception wasn’t bad enough on its own, what’s even more disturbing is their blatant persistence in calling this “state of being” excise tax a fee or penalty, even after the Supreme Court ruled it to be a tax. One has to wonder just who they are trying to fool at this point? Certainly members of the middle class, who are beginning to feel the pinch, are not fooled.

If the affordable care tax is indeed a fee, doesn’t the act of paying a fee normally correspond with the receipt of some good or service? Sure, but in the matter at hand, what does the middle class get in return for this so-called fee? Do we receive health insurance? Nope.

All the middle class winds up with is less money to cover its uninsured, out-of-pocket, health care expenses, and less to put towards compliance with the nefarious Act. So how exactly does this help the uninsured? Well, it doesn’t help this group.

If the affordable care tax is a penalty, doesn’t the assessment of a penalty normally succeed an act of wrongdoing? Yes, but in this matter, what wrong has been committed? Is the act of paying one’s own health care expenses out-of-pocket (without the benefit of health insurance) a crime? Since the statute waives criminal penalties for non-compliance with the requirement to maintain minimum essential coverage, it’s not a crime.

The Supreme Court agrees, its Chief Justice having stated that, “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax…” Had the court deemed it a penalty, the entire law could have been ruled unconstitutional. Face it, the affordable excise tax is just that, a tax. It’s not a fee, nor is it a penalty, so it’s high time you Grubers cut the B.S. and start calling it what it is. Hopefully, the new Congress will bring an expeditious end to this looming catastrophic nightmare.

To be continued…


Affordable Care Excise Tax, Part I

Affordable Care Excise Tax, Part III

Affordable Care Excise Tax, Part IV