Tax Lawyer's Blog

Gerald Prante of the Tax Policy Blog in What is a Tax? poses but doesn’t exactly answer this question:

Is a financial cost imposed by government for not having health insurance a tax?

Prante says that not all payments to government are taxes and uses the example of a taxpayers purchase of an item from the Smithsonian gift shop.

Americans for Tax Reform wrote on its blog today … “Any time that the Internal Revenue Service gets revenue from citizens, it is a tax, no matter what the wording.”

I would disagree with a simple revenue-criteria definition.

If I buy some Astronaut Ice Cream at the Smithsonian Gift Shop down the street from our office, is that a tax? Of course not. That’s because it is essentially a market transaction with government acting as the seller.

I agree with this, of course, but the difference between it and the health insurance case is that in the former the taxpayer is not required to buy a gift. In addition, in the gift shop scenario money is raised from non-American, non-taxpaying tourists not just American taxpayers.

The financial cost imposed by government on U.S. taxpayers for failing to carry health insurance is mandatory and borne only by American taxpayers.

Still not convinced? Consider this: The IRS will be the enforcement arm that will ensure its payment.

It’s a tax, folks.

I recently blogged about the government’s continued attempts to find creative ways to tax the middle class.

Here’s what I said:

Again, politically Obama and the Democrats can’t impose a direct tax on the middle-class. So what’s the solution?

Don’t do it directly.

The President has boxed himself in and now he and the Democrats, in order to fund their spending extravaganzas, must come up with creative ways to tax the average American through the backdoor. That is what Senator Baucus’s medical device tax is all about and that is what these silly soda and bad food taxes are all about.

As we get closer to healthcare reform taxpayers should expect Obama and his pals in Congress to increase their efforts to covertly tax the middle-class.

If Prante won’t say it I will: The financial cost imposed by the federal government on taxpayers for not carrying health insurance is a non-voluntary revenue raising mechanism the payment of which will be enforced by the IRS and is therefore a tax.

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