Opinion: The poor tax Democrats want to keep (and then increase)

Who, me? Supporting a poor tax? U.S. Senate Minority Leader Sen. Chuck Schumer (D-NY) gestures during a news briefing at the Capitol, Sept. 19. (Alex Wong / Getty Images)

The overriding dynamic in the current health-care debate in Washington is Democrats’ unified refusal to go along with anything the GOP can at all claim is “repeal” of Obamacare. That’s what is preventing even red-state Democrats from signing on to the various GOP plans, including (so far) the Graham-Cassidy bill.

Instead, Democrats say they want to “fix” Obamacare. What does that mean? Details are scarce, but here’s what it doesn’t mean: eliminating the individual mandate to buy health insurance.

I can say that with near-certainty. Why? Because the mandate is the element of Obamacare which most determines whether new proposals will get favorable or unfavorable scores from the Congressional Budget Office. The CBO assigns far more power to the individual mandate than current consumer behavior can possibly justify. More people have refused to comply with the mandate than gained insurance by purchasing plans on the individual market. Yet, CBO cites the elimination of the mandate as the cause of many of the individual-market coverage “losses” under GOP repeal plans. The fine print makes it clear these are mostly choices consumers would make, despite Democrats’ brazenly false claims that all of these people would be “kicked off” their plans. Making matters worse, and as I’ve detailed before, the CBO also cites the mandate for future “losses” of coverage by people who so far have chosen not to purchase plans. In other words, we’re talking about people “losing” something they currently do not have.

All of which brings me to the poor tax. Those who choose not to buy insurance are subject to a tax penalty. And who pays this penalty? Overwhelmingly, low- and middle-income Americans.

According to IRS data for 2015, the most recent year available, 61 percent of tax filers reported less than $50,000 of adjusted gross income. Yet the same data set shows 79 percent of those who paid the Obamacare mandate penalty fell into that income category.

Going down the income ladder a bit, we see that 37 percent of penalty payers earned less than $25,000 per year. What’s amazing about that is many of these people probably qualified for subsidies on the Obamacare exchanges. For example: A single, 21-year-old non-smoker making $25,000 per year would be eligible* for subsidies covering about half the cost of a “silver” plan, leaving a monthly bill of $144. That’s not free, of course, but at less than 7 percent of income it’s supposed to be the kind of “affordable” plan Obamacare set out to provide.

A two-person household earning $25,000 per year would have been eligible for a subsidized plan costing them just $93 per month. A three- or four-person household, just $43 per month. (The latter applies to those in Medicaid non-expansion states; in expansion states, they’d qualify for Medicaid. Even so, the percentage of households paying the penalty that earned less than $25,000 varied little from expansion states to non-expansion states, as this table for 2014 shows.)

Despite the subsidies, almost two in five households earning $25,000 or less chose not to buy insurance and to pay the penalty instead. Maybe they found it too expensive despite the subsidies. Maybe they decided it wouldn’t cover their needs; silver-plan deductibles can be $2,000 per year for an individual and higher. Whatever their reasoning, they preferred to pay a tax penalty instead. (This also throws cold water on the idea the mandate will eventually push more people to buy insurance.)

So on the one hand, Democrats insist on keeping that tax on lower-income households in place. After they railed against GOP plans that would lead to estimated coverage “losses” due to CBO assumptions, it would be the height of hypocrisy for them to turn around and support a plan that would eliminate or even ease the individual mandate and produce the same result. Theirs is the only party in favor of this tax.

At the same time, the single-payer model they increasingly support as an alternative would lead to an even larger tax increase on these and other Americans. For starters, there’s Sen. Bernie Sanders’ proposal for a new 7.5 percent payroll tax to help finance his single-payer plan (and by “help finance,” I mean all his tax plans combined pay for only half of it). On an annual income of $25,000 per year, that’s $1,875 — more than the subsidized “silver” insurance plan so many of these households chose not to buy. And that’s just the first tax hike.

The GOP has found the going tough when it comes to repealing Obamacare. But the promises and assumptions Democrats are making while fighting Republicans’ efforts are increasingly painting them into a corner from which they’ll have a hard time escaping.

*Because the IRS data is for 2015 and the subsidy calculator at the link is for 2017 dollars, you have to choose the “% of Poverty” option on the calculator and enter the amount for $25,000 based on the 2015 federal poverty guidelines found here. The differences are small (a couple of dollars per month in most cases) but there will be differences if you don’t make those adjustments.

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264 comments
yaluvi
yaluvi

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FIGMO2
FIGMO2

Came back to read all the comments here.

Great back and forth, until someone gets frustrated because their positions aren't being entertained by the opposing side. Then they revert to a defensive mode, as if the opposing side is trying to get one over on them.

As I see it, the biggest impediment to liberals' great plan is human nature.

Where did we fail?

“Henry James once defined life as that predicament which precedes death, and certainly nobody owes you a debt of honor or gratitude for getting him into that predicament. But a child does owe his father a debt, if Dad, having gotten him into this pack of trouble, takes off his coat and buckles down to the job of showing his son how best to navigate through it.” 
Field of Dreams asks the question, “What is it about fathers and sons?” 
I think the key is respect and, young or young-at-heart, knowing when to step forward and to step back. --- Sue Wildemuth


peyaxeb
peyaxeb

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breckenridge
breckenridge

I'm perplexed once again by this travel ban.  Want to keep terrorists out of America? Then ban males from Saudi Arabia.  This ban is a solution to a problem that does not exist.

SGTGrit
SGTGrit

It is beyond time for the country to acknowledge the tremendous damage the left has caused our nation and turn back this cancer everywhere it exists.

Starik
Starik

@SGTGrit  Just the left? What about Nixon? Bush? Trump? 

SGTGrit
SGTGrit

@Starik @SGTGrit 

Nixon is dead and so is LBJ. Bush Sr. and Bush Jr. are long out of the political arena. As for Donald Trump, so long as he continues an American traditionalist direction and doesn't waver I'll continue to support him.

Starik
Starik

@SGTGrit @Starik  That's your right. I agree with some of what you say about the left, especially the far left, but neither party is without guilt for the decline of the country. Please try to be objective about Trump. He has no principles. He just talks and makes money for himself. 

SGTGrit
SGTGrit

@Starik @SGTGrit 

Quite to the contrary when you say Trump has no principals and only makes money for himself I view that as subjectivity. I agree that Republicans have contributed to the country's problems. I won't disagree with that observation. I'm not a registered Republican but unfortunately, I have to vote for them because the alternative would be not to vote.


BTW...I ordered The Vietnam War DVD set from Amazon. Being a new customer they gave me a $50. visa credit. The cost was $24.50 that included shipping. My wife's Asian so she has no interest in seeing it but my daughter has an inquisitive mind and wants to learn history, so I'll watch it with her.

SGTGrit
SGTGrit

@Starik @SGTGrit 

She's ethnic Chinese and was born and raised in Indonesia. Her family like many others during the communist take over in China escaped and settled throughout Indochina. 
We'll see when I get the DVD's. Maybe I'll popcorn or maybe I won't. It's been a long time.

Starik
Starik

@SGTGrit @Starik  I've always liked marriages between Europeans and Asians. Beautiful kids.

SGTGrit
SGTGrit

The Falcon eke out a win and the NFL scores another loss.

AzaleaAnnie
AzaleaAnnie

The problem with American health care is not health care providers:  the USA has the best health care in the world.  That's why so many people who can afford to do so come from their own countries to the USA for health care.


The problem with American health care is Americans:  


- Too many of us continue to use tobacco products;

- Too many of us eat junk food on a daily basis;

- Too many of us never - or rarely ever - cook a meal at home;

- Too many of us sit in front of the boob tube and get no exercise;

- Too many of us are obese or grossly obese;

- Too many of us take too many legal drugs;

- Too many of us take illegal drugs (and die from them every day);

- Too many of us go through the revolving doors of drug treatment    units, both state-supported and private-profit facilities, again          and again and again;

- Too many of us have multiple sexual partners, at times with            people whose last names they don't know.


People who don't use tobacco products, who eat healthy meals, who exercise regularly, who take no drugs (or minimum physician-prescribed meds only), live healthier and live longer.  



Pub Heaven
Pub Heaven

And so easy to change people's behaviors...

MarkVV
MarkVV

@AzaleaAnnie All that is true, but how does that contribute to the debate regarding the healthcare system? What do you want the government to do? Prohibit junk food, sitting in front of the boob tube, having multiple sex partners? Force people to cook meals at home?

JFMcNamara
JFMcNamara

@AzaleaAnnie All of those things are because America has a terrible culture.  If you are not rich, your life is awful.  You work long hours for little pay with no vacation and no real future.  


Nobody wants to cook a meal after working 12 hours while still having to help kids with homework and get them ready for bed.  No one wants to exercise after all that's done. People drink caffiene in massive amounts just to get through the day, then get drunk or high just to forget how miserable they are.  


Happy people don't smoke, drink, do drugs.  Happy people exercise and cook at home.  Most Americans are simply not happy.  They are miserable and self medicating. That's the root cause.

Starik
Starik

@Pub Heaven  Too many of us don't make enough money for insurance. Too many have pre-existing conditions that until Obamacare, prevented them from getting insurance. The pharmaceutical companies charge too much, as do hospitals and many doctors. Most of all, what a big chunk (20%?) of the highest expenditures for health care in the world gets wasted by payments to private insurance companies. 

Starik
Starik

@JFMcNamara @AzaleaAnnie  That's how we got Trump. The decent working class voters who were fooled into supporting him have legitimate grievances. They did the right thing. Finished high school. Stayed away from the criminal economy. There is no future for them. 

Starik
Starik

@Pub Heaven  People's behaviors don't cause disease and defects that will kill people or prevent them from taking care of themselves. Evolution is a long, imperfect process. 

breckenridge
breckenridge

Is Trump dividing America? 66% of Americans think he is.  27% do not think so.

JFMcNamara
JFMcNamara

@breckenridge Republicans hate the "culture wars", but it's been all culture wars and no policy since January.  I think we can put to bed that it's the Democrats who mainly propagate it.

SGTGrit
SGTGrit

@JFMcNamara @breckenridge 

I guess you're not aware of the removal of regulations on business and the resultant boost to the economy. I guess you're not aware of the decline in illegal immigration because law enforcement has been allowed once again to do their job. I guess you're not aware of the changes in our foreign policy that has reclaimed our status in the world. I guess you're not aware of the efforts to correct the Obamacare mess and the tax reform agenda. Typical far-left ignorance.

JFMcNamara
JFMcNamara

The regulations removed were all implemented within the last six months of the Obama administration. Many had not gone into effect.

Illegal immigration had already stopped. He had nothing to do with it. Look it up.

Our place in the world is much less. We went from a leader on things like climate to a non factor. Other countries are openly distancing themselves from us. On top of that, he bas accomplished nothing. What are the foreign policy wins? Sanctions on North Korea? Giving up and deciding to lose in Syria?

What has actually changed about tax reform and Obamacare. No bills have passed. Those are both abject failures at the moment.

breckenridge
breckenridge

@SGTGrit @JFMcNamara @breckenridge 

Has reclaimed our status in the world? Trump is a laughingstock in the rest of the world.  That's not something we aspire to be. 

Sorry, but you're just plain wrong.

Pub Heaven
Pub Heaven

"I guess you're not aware of the changes in our foreign policy that has reclaimed our status in the world.

😂😂😂😂😂😂😂😂😂

Starik
Starik

@Pub Heaven  MCGA. Make China Great Again. That's our orange (sometimes) headed Prez. 

MarkVV
MarkVV

In yesterday’s debate, Kyle claimed that countries with universal healthcare systems actually cannot afford them, and advised to check their debt-to-GDP ratios. Perhaps he is the one who should do that.

Kyle Wingfield
“Psst ... most of them can't really afford their health-care systems, either. Check their debt-to-GDP ratios.

When we refer to “European developed industrialized countries with highly developed social systems, we usually have first in mind the Scandinavian countries. Here are their debt-to GDP ratios (which Kyle himself presented four days ago):

Norway (32.2%), Denmark (39.6%), Sweden (41.4).

Keeping in mind that the US ratio is 73.8%, other European with universal healthcare also have the ratio lower than the US: Switzerland (34.1%). Finland (64.9%), Netherlands (63.7%), Germany (69%).

No doubt there are other European industrialized countries with universal healthcare and higher debt-to-GDP ratios, such as Belgium (106.7%), UK (92.2%), France (96.5%), and the southern European countries with weak economies. But to claim that the debt-to GDP ratio shows that the countries who have universal healthcare systems cannot afford them is a bogus argument. Let’s keep also in mind that with the exception of Norway and Switzerland, all the above countries are “less rich”(according to the GDP per capita figures), than the US.

MarkVV
MarkVV

Not surprisingly, SGTGrit swallowed Kyle's bogus argument with the highly intellectual "Yep."

SGTGrit
SGTGrit

@MarkVV 

Of course you're referencing much smaller countries than the U.S. Try to hide and then come back when Kyle, isn't around to kick you to the curb. You are pathetic. Kind of like what you tried to do with me.

Starik
Starik

@SGTGrit @MarkVV  The US is 55th in infant mortality rate. 31st in life expectancy. We're at or near the top in medical research. We're number 1 in expenditure per capita. You're happy with this? 

JFMcNamara
JFMcNamara

@SGTGrit @MarkVV Maybe it took him time to look it up.  


Secondly, this is a percent of GDP, so population is already accounted for.


They don't waste their money on wars and an oversized military.  If we used our money on citizens, we would have a lot more stuff and a lot less debt.

MarkVV
MarkVV

@SGTGrit @MarkVV Apparently you have not noticed that the numbers are per capita, or you don't know what that means.

SGTGrit
SGTGrit

@JFMcNamara @SGTGrit @MarkVV 

Do you understand what GDP is? Do you understand what debt is" Do you understand what the debt to GDP ratio is. Mark references countries that spend essentially nothing on national defense or foreign aid. 

AzaleaAnnie
AzaleaAnnie

@Starik @SGTGrit @MarkVV  Any idea how the US came to get the high infant mortality rate?  We used to have very low infant mortality rates.  Look at young women who use all sorts of drugs who become pregnant.....that changed when the US became  a drug cesspool.


And you're right - we are at/near the top in medical research - we provide research for much of the world.  


And as for the expenditure per capita: too many of us aren't healthy by choice:  we eat / drink / smoke /use too many legal and far too many illegal drugs / sit / never-or rarely ever- cook at home.  That's a recipe for poor health.  


It's not cheap to take care of drug users who don't want to quit, who OD and spend a week in the hospital and  months in a treatment center only to go out and do the same thing again....and again.


It's not cheap to take care of people who eat junk food, who sit all day, who drink till they pass out, who use any drug that's available.  

Starik
Starik

@AzaleaAnnie @Starik @SGTGrit @MarkVV  Let them die? Prevent preventive medicine and addiction treatment? We overpay for our drugs; the rest of the world negotiates costs. They benefit from American research. We overpay. 

Starik
Starik

@SGTGrit @JFMcNamara @MarkVV  They don't spend "nothing." They spend what they need to. An E-1 makes $1,599.90 monthly after 4 months. Why not draft the people we need and pay very little? My pay as an E-1 was $97.50 per month. Why do we pay pay for $150,000 vehicles to do what jeeps (M151s)  and trucks did adequately? Multi billion dollar aircraft carriers that make lovely targets if we ever need them?  Billions for Israel and Egypt? 

remiwonoko
remiwonoko

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breckenridge
breckenridge

"As a graduate of the United States Military Academy at West Point and a Vietnam veteran, I want to work our military strong again. I want it freed from political correctness and social experimentation, like transistor troops in our bathrooms and inclusiveness."  Roy Moore, R-Alabama, who has the lead in the race to replace Jeff Sessions in the US Senate, 9-21-2017.

Yes, we definitely need to avoid transistor troops in our bathrooms. 

 Uh........what the heck is a transistor troop?



Starik
Starik

@breckenridge  Moore was an MP officer, in charge of the stockade at DaNang. It would have been miserable to work for him, and worse to be a prisoner. 

breckenridge
breckenridge

@Starik @breckenridge 


Moore could easily serve as a poster child for the religious right - a bigot who tries to pass off his bigotry as religion, and an ardent enemy of the Establishment Clause in the United States Constitution. This country will be a slightly better place when he is dead and gone.

Starik
Starik

@breckenridge @Starik  He's another example of the poor leadership we had in Vietnam, at least in the Army. Remember junior college dropout William Calley? Not officer material. Neither was Moore.