The whole debate around ObamaCare is politically explosive and extremely complicated. I am not going to complicate on the law as a whole. However, part of it is a tax and I think you should know about that. The most debated part of the law and the most unpopular is the mandate that requires every individual to purchase health insurance. Most of us will be required to purchase health insurance. If we don’t, there is a financial penalty and the Court has construed it as a tax. In fact, this tax will be collected by the Internal Revenue Service.
The Politicians of course avoid using the word “tax.” Instead they call it a penalty for “failing to act responsively.” They had other legal arguments, but the Supreme Court rejected those arguments, and upheld the government’s argument that it had the power to “levy taxes.”
Ultimately, the Supreme Court ruled it is a tax and it will be collected by the IRS.
The IRS will not be permitted to prosecute violators or to place tax liens against them. However, they will be able to withhold money from your income tax refunds.
WHAT ARE THE NEW TAXES THAT ARE IN THIS LAW?
There is an assortment of new taxes including:
Individuals making more than $200,000 a year, and couples earning over $250,000 will get new payroll taxes. These people are also going to be hit with a 3.8% tax on investment income. Also, companies that make medical devices will pay a new 2.3% excise tax that will probably get passed along to patients. Also, those of us paying taxes will have to spend more on unreimbursed medical care before we can claim that expense as an itemized deduction.
It is safe to assume that the politicians will continue to fight over this law- the Republicans Led House has already voted to appeal the law. It is also safe to assume there is still a long way to go in solving the country’s health care issues.
For those of us who live in the real world, it comes down to the issue you buy health insurance, or you would be hit with a new tax.