Justice Roberts cast the deciding vote making Obamacare the law of the land. His logic was largely that it is nothing more than a tax – a whopper of a tax – but just another tax. Dems are spinning like so many whirling dervishes to avoid the term ‘tax’. Republicans are tarring and feathering Roberts as a traitor to his people. Let’s make this whole thing simple.
Let’s say you and your neighbor have identical incomes and live in houses with identical value. You are buying your house and paying on a mortgage with interest. Your neighbor is renting.
With your identical incomes you both pay income taxes of $20,000. However, to encourage home ownership and stimulate the construction industry you get to deduct your interest payments so you actually pay $18,000 in income taxes while he pays the full $20K.
Now let’s say the government decides to reduce the tax rate for everyone, eliminate the deduction for mortgage interest, but charge an Obamacareesque penalty of X% of income to everyone who does not buy a house. The reasons for the penalty are the same – to encourage behavior that is deemed not in the best economic interests of the nation.
As a result of replacing tax deductions for people who behave the way the government wants them to with a system penalizing those who don’t you and your neighbor pay an income tax of $18,000 because of the tax reduction, but he now pays a $2,000 penalty for not buying a house, so his total bill to the IRS is still $20K.
Two different avenues to get to exactly the same place – encouraging behavior from the taxpayers the Congress has deemed to be for the greater good by making misbehavers pay more to the government.
The following video explains the principle quite clearly:
The politicians can call the extra two grand charged to the guy not behaving properly a tax, a penalty, a fee, a surcharge …..Democrats say to-may-toe, Republicans say to-mah-toe ….to the guy paying the government it makes no difference whatsoever.
To pay for health care Obama basically had the same choices – Option #1 is to increase taxes but give a tax deduction for everyone who is paying for health insurance; or Option #2 to leave taxes alone and charge a penalty to those not paying for health insurance.
Even though they have exactly the same impact on both taxpayers and government coffers one is described by the word “tax”and the other by the word “penalty”. Purely semantics, but Option #1 involves increasing taxes which is a politically disastrous thing to do. So doing the exact same thing without having to use the term ‘tax increase’ is much easier to sell, but that hardly changes the nature of the thing.
All Justice Roberts did last week was acknowledge the obvious: whether you call them to-may-toes or to-mah-toes, taxes or penalties, they are the same thing. The Supreme Court has one job – to determine whether laws are in keeping with the Constitution. Congress has the Constitutional authority to levy taxes. A check written to the government mandated by law is a tax – no matter what word games are played, or which one of many ways to construct an equation with the same answer is selected.
Why call the whole thing off? Every lean proponent should know the answer to that one. It is typical of most organizations – especially the government. It tries to fix a problem by manipulating the outcome rather than by dealing with the process – getting to the root cause of the problem that is causing the unacceptable outcome.
The root of the problem is out-of-control health care costs. Obamacare does nothing to address that problem. The out-of-control costs are mostly massive non-value adding waste, and while there have been some encouraging inroads, the health care industry as a whole has not pursued lean principles. Health care gets fixed when health care gets lean – period. Layering more waste and bureaucracy on top of the current waste through a Byzantine set of government controls is a giant step away from lean principles.