Gruber's Comments.....Discuss. Link. nt

[Aloha Hoosier]

It's not obvious? I thought it was. The penalty is an increase in . . .

income tax owed. If a person doesn't buy acceptable insurance, her income tax owed is increased by a set amount or a percent of income, whichever is larger. You could read the administrations explanation to the USSC that the penalty is obviously a tax or the USSC's decision that upheld the individual mandate because they agreed the penalty was a tax.

It's quite a bit different from a fee to enter a national park or something along those lines as well. Your income taxes aren't increased by a set amount or percent of income to enter the park. Also you're not forced to go to the park and pay to enter or pay more income tax if you don't..

 

[Marvin the Martian]

So if the IRS collects it, it is a tax?

That might work for a definition, which would mean that penalties for not paying taxes are a tax.

The National Parks Service exception is true. I couldn't think of a federal example, which is why I started with the penalty for not shoveling your sidewalk after a snow. Some communities have grass height requirements. Those seem to me to be closer to ACA. If you don't shovel your walk, you pay a $50 fine. You can get out of it by shoveling your walk, or you may just choose to pay the fine.

Ah, here's one. A business is required to file a W2 form for employees and if not, they are subject to a fine per employee. This is actually what I did in my year at the IRS, I handled employee complaints their employer would not give them a W2. At the time it was a $5 fine per employee. That surprised people, as that wasn't much of a fine. But the question is, if a business elects not to give W2s to 20 employees, would that $100 be a fine or a tax? The business has the choice, pay to have W2s done or pay the $100 just as a person has the choice between paying the "penalty/tax" or buying insurance.

I'm not sure it is a tax, I'm not sure it is a penalty. It is enforced by the IRS, which is a step toward tax. But it has an easy escape clause, just buy insurance. That is more of a penalty as it is usually more difficult to escape taxes (legally).

Since i mentioned the snow clearing idea, did you ever here this Sam Grant story of him suing for a homeowner not clearing his sidewalk in violation of city ordinance? In a coincidence, Zachariah Chandler would serve on the Joint Committee on the Conduct of the War so I'm sure there was some bad blood there.

 

[Aloha Hoosier]

The penalty is an increase in income tax owed.

That just seems so undeniably obvious that I'm not sure why you want to continue to talk about it. Maybe you were one of the ones here that argued that it wasn't a tax before the administration legally argued that it is in fact a tax and the USSC agreed that it is in fact a tax, but now it seems even more pointless. It is firmly and legally enshrined as a tax and seems to fit the definition of "case closed." I don't see any reason why we should continue to argue about it. It's like arguing about whether water is wet. It's wet. If you want to argue that water isn't wet than you won't be arguing with me.

 

[davegolf]

Re: This will be both on and off-topic

Growing up we thought of elitists as being liberal intellectual minds who had all the answers but never worked a day in their life in the real world. They thought of the rest of us a s stupid and incapable of making decisions for ourselves. Gruber proves beyond a doubt that that definition of elitist is true today. They had to lie to us to pass ACA but that is ok it was in OUR best interest. The end always justifies the means for them.

This post was edited on 11/20 9:29 AM by davegolf

 

[Marvin the Martian]

I don't believe I have ever taken a view on it

I haven't really thought of the distinction because my money doesn't normally care about why it is being spent. My car is in the shop, I have no idea what the final bill will be. But if the amount is going to be $1000, my money doesn't really care if it is $10 parts and $990 labor or if it is $990 parts and $10 labor. All my money knows is that $1000 of its best friends are leaving.

Since this debate was happening, I thought I'd ask what the distinction is, maybe it does make a difference. It seems the legal distinctions are at best arbitrary, as I point out the IRS penalty on not delivering W-2s could be a penalty or could be a tax. I don't know why calling it one or the other makes any difference in real life, it doesn't make paying it any different. I wouldn't feel happier paying a penalty or a tax over the other, neither would bring enjoyment. It seems the entire debate, from both sides, is a semantic exercise more than a real practical one. Our money doesn't care.

 

[Aloha Hoosier]

People care.

That takes us back to one of the reasons Democrats refused to acknowledge that this particular penalty was a tax (specifically an income tax) until they had to defend the law in court when they argued successfully that it was a tax. The People do not like increases in income tax and especially middle class increases in imcome taxes. It would have been very damaging politically to admit that the penalty actually amounted to an increase in income taxes for some people and many of those people would be in the middle class. Admitting that some people would have their income taxes increased as a result of the bill might have awakened a lot more interest in what the heck congress was about to do and generated even more popular opposition to the bill. That in turn could have resulted in some of the Democratic congressmen to vote against it. It would have only taken one Democrat in the Senate to get cold feet and it would have been defeated (instead they voted "yes," and many of them in turn were thrown out on their ears in the next election). It was a very close call.

The other reason they refused to acknowledge it, and why they used the word "penalty" in the bill was to get a more favorable CBO score for it - which of course was also part of the strategy to engender support for it. I'm still convinced that it will ultimately result in a large increase in are deficits for the same reasons I presented several times prevsiously. Some of those include that some of the revenue increases will never happen because the politicians won't ever let them happen. For example the employer mandate (and the taxes businesses will have to pay for not complying) has already been delayed for a year by the President. The President knows it's unpopular and it's a job killer. It's unlikely to survive. The medical device tax was ill-conceived and also unlikely to survive. The "cadillac tax" is very unpopular with unions and is unlikely to survive. Those are just two of several.

This post was edited on 11/20 10:27 AM by Aloha Hoosier

 

[Aloha Hoosier]

Were unions exempted?

If so, I missed it. The unions were against it at the time of the bill and it was included in the bill. Might be that the President delayed that provision. He's taken dozens of actions to delay or defer aspects of the bill. Can't keep track of them all.

However, the CBO scored everything in the bill, inclluding the "cadillac tax" and they must have some numbers as to how many plans would be changed and how many wouldn't to come up with the revenue they believed would be generated from the "cadillac tax."

 

[Marvin the Martian]

But it is only a tax on those who make a choice

The cadillac tax is a tax, I get that. The other tax though is only a tax on those who choose to go uninsured. So I guess we can call it an uninsured tax, which is in effect a penalty.

The wording I recall was that people without insurance will pay a penalty, I think we all knew that people without insurance would be paying some money to the government and it was billed as a "penalty". Now we are saying people without insurance are paying taxes. That may well be true, but if I'm paying it I still don't know why I would be mad. Are people saying "Damn, I thought this $2000 I am sending the IRS was a penalty, and I was OK with that, but now i discover it is nothing more than a $2000 tax and I'm mad as hell". I just don't see the difference, I'm paying it either way. But maybe I am naive on this, I'm not the most money savvy person here.

 

[Aloha Hoosier]

Change "penalty" to "additional income tax."

It means essentially the same, but changing the language would likely have killed the ACA. Yes, you only pay if you don't buy the insurance, and it may not matter to you, but the President and other Democratic politicians thought it mattered a great deal to a lot of Americans. It was an even bigger deal because the idea of being mandated/forced to buy something, even insurance, is very unpopular with a lot of Americans. It still is. The President knew this and famously denied the mandate penalty was a tax and the Democrats knew this and also insisted it was a tax - UNTIL they had to defend it in court then they admitted it was a tax. The USSC ruled it was indeed a tax. Case closed. I really don't see the need to argue this any longer. I've said the same thing a couple times and you've said the same thing a couple times. I understand your position. I think you understand mine. I believe we're done here, aren't we?

This post was edited on 11/20 12:12 PM by Aloha Hoosier

 

[NPT]

I've read a couple places that

they were exempted. It's hard to know what's true with all the crap on the internet.

 

[RerunStubs]

But why does that matter?

I don't see why it's misleading to structure it so it's scored as a penalty under budgetary rules -- and therefore less likely to arouse opposition among people who aren't paying close attention to the substance of the policy -- but it's truthful to structure it so it's scored as a tax under budgetary -- and therefore more likely to arouse opposition among people who aren't paying close attention to the policy.

It's not like the words "tax" and "penalty" have some universal, essential quality to them such that they can carry only one meaning in all contexts. It just depends on how you define them. The Roberts opinion underscored this. Though the mandate wasn't a tax for Anti-Injunction Act purposes, it was a tax for constitutional purposes. Likewise, though the mandate wasn't a tax for CBO scoring purposes, it was a tax for Constitutional purposes. Elmendorf and Roberts relied on the labeling conventions that are specific to their disciplines; neither was right or wrong in some cosmic sense. It's too bad for opponents of the bill, I guess, that the budgetary assessment came out a few years before the Constitutional one, but there's nothing misleading about this.

I suspect a lot of Republican really believe that it was "misleading." But I think what's motivating their belief is the frustration that labeling it as a penalty made it easier to sell support for the bill and harder to sell opposition to the bill. As usual, the process argument just masks the substantive one.

 

[NPT]

The point is Marvin

Why do you think the administration went to great lengths so say it wasn't a tax when it was a tax? They didn't use the word tax and penalty as though they were one in the same. Look at this clip.....Obama insist it is NOT a tax.

 

[NPT]

You aren't naive

You and I both knew it was a tax but the administration knew they had promised not to increase taxes so they insisted it was a penalty. They could have said "If you don't buy insurance your taxes will increase" thus breaking the "I will not increase taxes on those below $250,000 (paraphrasing)" promise. Of course it only hits you if you decide not to buy insurance but I don't see why that makes a difference....it's still a tax increase.

 

[davegolf]

Re: Having been removed from it in time . . .


You are missing the whole point had not the planned deception been put in place the bill would never have passed. Gruber's instructions were to fudge the numbers/facts to get the necessary votes because the end justifies the means. Remember if the mandate was not a "tax" as Chief Justice Roberts ruled then the ACA would have been unconstitutional.

 

[davegolf]

Re: Who is deceived there?


Totally agree and the voters spoke loudly and clearly in the last election and none agreed with you.