Tax penalties and prison

Liberal application of punishment for noncompliance

By Donald Lambro

In all the sanitized TV news reports about the House-passed health care plan, no one mentions the shocking tax penalties and maybe jail time implicit in the bill's nearly 2,000 pages.
This is what could await uninsured Americans who do not want to buy health insurance as the bill demands them to do - or else.
Congress' Joint Committee on Taxation (JCT), in a letter to the House Ways and Means Committee, confirms that failure to comply with the terms of the law that the Democrats passed last weekend could put people in jail. The JCT told the committee that anyone who decides not to maintain "acceptable health insurance coverage" or, absent that, pay the individual health insurance mandate tax of about 2.5 percent of income, would be liable to large fines or prison sentences.
"This is the ultimate example of the Democrats' command-and-control style of governing - buy what we tell you or go to jail. It is outrageous and should be stopped immediately," said Michigan Rep. Dave Camp, ranking Republican on the tax-writing committee.
"H.R. 3962 provides that an individual (or a husband and wife in the case of a joint return) who does not, at anytime during the taxable year, maintain acceptable health insurance coverage for himself or herself and each of his or her qualifying children is subject to an additional tax," the JCT letter stated.
"Prosecution is authorized under the Code for a variety of offenses. Depending on the level of noncompliance, the following penalties could apply to an individual" under these circumstances if the government determines the taxpayer's unpaid tax liability results from willful behavior, the JCT explained. It gave two examples when these penalties could be applied under the U.S. tax Code:
c "Section 7203 - misdemeanor willful failure to pay is punishable by a fine of up to $25,000 and/or imprisonment of up to one year.
c Section 7201 - felony willful evasion is punishable by a fine of up to $250,000 and/or imprisonment of up to five years," the JCT letter said.
The Congressional Budget Office says the lowest-cost nongroup family plan under the House bill would cost $15,000 in 2016 - a hefty sum for millions of middle income, mostly younger Americans and families whose budgets are stretched as it is.
The Senate Finance Committee reduced the penalties for the failure to purchase health insurance, although noncompliance could still hit uninsured Americans with significant tax penalties. But that will lead to further financing problems because it creates an incentive for younger workers who would prefer paying the fine than costlier insurance premiums, shrinking the risk pool of healthier people needed to offset the costs of everyone else.
The $1.2 trillion House legislation, with its other insurance mandates, price controls, taxes and a massive federal bureaucracy made up of 118 new programs and agencies, barely passed on a virtual party line vote. Few if any lawmakers read the bill or fully understood what it contained. Thirty-nine Democrats voted no, and the loss of three votes would have killed it.
That's hardly a vote of confidence in a government takeover of one-sixth of the American economy that will make getting any bill over the Senate's 60-vote hurdle even more problematic.
"Many Democratic House members were strong-armed into voting for a bill that they know violates the basic freedoms upon which this country was founded, but they didn't want to be the ones to hand defeat to their president or party," said health care analyst Grace-Marie Turner.
Now the battle moves to the Senate, where Republicans are preparing to filibuster any bill Majority Leader Harry Reid brings to the floor, where he faces a number of potential defections in his party.
Sens. Joe Lieberman, Connecticut independent, and Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, and Mary L. Landrieu of Louisiana, among other Democrats, have expressed misgivings about Mr. Reid's plan.
But Mr. Reid's problems are not confined to his own caucus: An army of special interests that represent much of the Democratic Party's base are aligned against key parts of the bill.
The AFL-CIO is bitterly opposed to the bill's tax on more generous or so-called "Cadillac" health care plans that would hit organized labor where it hurts most: health care benefits that rank-and-file union members have won over several decades of negotiations.
Then there are seniors who strongly oppose the Senate plan, despite the AARP's endorsement, because its financing is based on deep cuts in Medicare.
The Senate Finance Committee bill "cuts Medicare by around $470 billion over 10 years. The House version takes an even bigger bite out of Medicare ... around $540 billion. That's more than half a trillion dollars in Medicare cuts," Sen. Charles E. Grassley of Iowa, ranking Republican on the panel, told his colleagues in a floor speech last week.
This is a bill that will not cut health care costs - it will increase them with a wave of government mandates, regulations and taxes that will drive up insurance premiums and put hospitals and doctors under new financial pressures that will result in lower quality medical care for everyone.
Donald Lambro is chief political correspondent for The Washington Times.