Does It Matter If The Mandate Is Called A “Penalty” Or A “Tax”?
The debate over whether the PPACA's individual mandate is a "penalty" or a "tax"seems rather pointless.
Ezra Klein argues that the debate that has developed in the wake of the Supreme Court’s ruling on the Affordable Care Act over whether the individual mandate is a penalty or a tax is really rather pointless:
Nor is it credible to say that this distinction will have real political consequences. “Tax” is not a popular word. But neither is “penalty.” It’s very difficult to imagine the voter who loved the idea of paying a penalty for going without health insurance — aren’t penaltiesgreat? — but is morally appalled at the prospect of paying a tax.
And, remember, the individual mandate is a well-known policy that is already extremely unpopular. In fact, it’s the most unpopular provision of the health care law, and always has been. The people who don’t like it already know they don’t like it. The people who do like it are, at this point, well aware that they like it. The idea that, this late in the game, even one vote will be decided by whether Republicans call this already-disliked policy “a tax” rather than “a penalty” or “government coercion” or “jackbooted thugs making you buy health care” strains credulity.
Klein points out, correctly, that the mandate works exactly the same way regardless of what you call it. If you don’t have health insurance and can afford it, then you are either charged a tax on your Form 1040, or you are assessed a penalty on your Form 1040. What, exactly, is the difference? Klein’s Washington Post collegue Chris Cillizza tries to explain the Republican strategy here, and why the Romney campaign needed to backtrack on the comments made earlier this week:
Republicans have long scored political points by bashing Democrats as lovers of big government who want to finance growth in the size of the bureaucracy by raising taxes. That the key provision of Obama’s health care law was upheld due to a tax provision, then, fits perfectly into an advantageous political frame for Romney — and Republicans more broadly.
I get the logic, and the reason why the Republicans are trying to hang the tax banner around the entirety of the PPACA, but I think Klein has a good point here. The law in general, and the individual mandate in particular, were also widely unpopular well before the Supreme Court rendered its ruling, Notwithstanding the fact that recent polls have shown the nation largely divided on how they feel about the Court’s ruling, it seems unlikely that those sentiments are going to change any time soon. It also doesn’t seem likely that the election is going to hinge on whether voters perceive the mandate as a tax or as a penalty. The logic of the Republican position seems to be that a government imposed “penalty” would be viewed more favorably than a tax, but that doesn’t seem very logical. People don’t like paying taxes, obviously, but who likes paying a penalty? Moreover, calling it a “penalty” raises implications that the person it’s being imposed on did something wrong. Who wants to be told by their government that they’ve done something wrong?
I’m also skeptical about the idea that the Supreme Court’s decision somehow means that the entire PPACA is now a tax. What the Supreme Court ruled last week is that the individual mandate is constitutional because it can be authorized under Congress’s power to “lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” Does that mean that the entire law is a tax now? As a matter of law, it most certainly doesn’t. Politically, of course, it’s quite a different matter and this is largely a war of semantics that will be won and lost in the news cycle. However, you can disagree with Chief Justice Roberts’ ruling as much as you wish, but it simply isn’t true to say that the Court ruled that ObamaCare is a tax.
Perhaps I’m wrong about this, but it strikes me that the Democrats and the Republicans are arguing over what is essentially a meaningless semantic difference. It really doesn’t matter whether you consider the mandate a penalty or a tax, if you don’t like it you’re not going to like it. It will be interesting to see some polling on this issue, but my guess is that the “penalty v. tax” debate is an entirely inside-the-beltway meme and that most voters don’t even understand what the two sides are arguing about.