Obamacare

[Black Bart]

Just saw on the news that it was upheld by Supreme Court. Anybody know when we have to start collecting/figuring on it?

[JohnH]

I'm thinking retirement is looking better & better. If not next year, then certainly by the following year.

[Roberts]

Can't imagine it'll be a big deal on our side. Most likely it'll just be a check box we handle during the interview if the client is of a particular age. It'll likely be added to the "other taxes" section.


It's interesting though that it's a TAX if don't have insurance. I don't know of a tax that is assessed if you DON'T take action. Can anyone think of one?

[ChEAr$]

I suppose IRS can now proceed with hiring more agents to enforce the new tax.

This brings all kinds of questions, though.
1. Will everybody have to file a tax return even if under minimum income requirements in order to affirm/swear/aver that they are covered?
2. Will IRS agents swoop down among the homeless living under bridges to compel them to file returns and pay the tax?
3. Will circular 230 include penalties for preparers who may have missed asking the right questions?
4. Will I benefit from the so called Affordable Health Care Act?
5. Will you?

[David1980]

The individual mandate takes affect in 2014, so we'd see it on the 2014 tax returns. So approximately 3 years from now. The penalty for 2014 is $95 or 1.0% of income (I assume the greater of?), $325 or 2.0% in 2015, $695 or 2.5% in 2016, and then indexed.

The employer mandate is also 2014.

http://fleming.house.gov/uploadedfiles/hc_timeline.pdf

http://www.obamacarewatch.org/primer/individual-mandate

http://www.obamacarewatch.org/primer/employer-mandate

50 employees on the employer mandate, doubt I'll be doing any returns with that many employees. Individual mandate is more likely to be encountered, but I also expect it'll be as simple as a check-the-box deal. I don't see this adding much complexity to my work.

[Roberts]

I suppose IRS can now proceed with hiring more agents to enforce the new tax.

This brings all kinds of questions, though.
1. Will everybody have to file a tax return even if under minimum income requirements in order to affirm/swear/aver that they are covered?

Very doubtful since those individuals will likely be covered by health insurance someplace else. Dependents are covered up to age 26.

The 50 employee limit is going to be a larger deal and I can't imagine doing the tax returns and audits for those companies. In Europe with all of their larger corporate regulations, there has been a major shift away from large corporation to small businesses. Example as of 2009:

In America self employment is 7% of the public.
Greece it's 35%
Germany 12%
UK almost 14%. That's probably our future.

EDIT: Just realized that Justice Roberts ruling stats that the tax / penalty is applied only to those households that have a federal tax burden. If you have no federal tax burden, you are not subject to this potential tax.

[OtisMozzetti]

It's interesting though that it's a TAX if don't have insurance. I don't know of a tax that is assessed if you DON'T take action. Can anyone think of one?

Roberts, I note that you are using the same surname as the Chief Justice of the U.S. We have lots of taxes which are imposed depending upon your behavior (what you DO or what you DON'T do), where the intent pretty obviously isn't primarily to raise revenue. The best example I have to start with is the additional tax imposed if you DON'T keep the assets in your IRA until you reach age 59-1/2 or meet other specified exceptions.

[Roberts]

Roberts, I note that you are using the same surname as the Chief Justice of the U.S. We have lots of taxes which are imposed depending upon your behavior (what you DO or what you DON'T do), where the intent pretty obviously isn't primarily to raise revenue. The best example I have to start with is the additional tax imposed if you DON'T keep the assets in your IRA until you reach age 59-1/2 or meet other specified exceptions.

I'd say the reverse. There is a tax imposed for ACTING and I said in this case it's a tax for NOT acting.

A better example would be not taking the required minimum distribution on an IRA.

[OtisMozzetti]

I'd say the reverse. There is a tax imposed for ACTING and I said in this case it's a tax for NOT acting.

A better example would be not taking the required minimum distribution on an IRA.

Roberts, what you say is of course a good example that directly provides a suitable example. I would say though that there is no reason that there is any real distinction between the behavior of taking action or of not taking action. Moreover, almost any behavior can get described in a positive action phrase or in a negative inaction phrase.

Failure to take the RMD is actually described as "tax on excess accumulations", on the behavior of accumulating assets for too long a time in the retirement plan. Yet, I agree with your example that it is a tax on NOT taking a distribution.

[Bees Knees]

Moreover, almost any behavior can get described in a positive action phrase or in a negative inaction phrase.

You could say the insurance mandate is a tax on those who earn income above the filing requirement, except that the tax won't be imposed if you buy insurance. Thus, rather than a tax on inaction, now it is a tax on earning income, with an exception for those who buy something.

That, however, is not what the Supreme Court said. The Court specifically said that nothing in the Constitution prevents Congress from imposing a tax on not taking any action, as long as it is a tax and not a violation of any law.

In other words, as long as it is just a tax on not taking any action, it is OK. If not taking any action violates the law, it is not OK.

Thus, if the government wants us to eat broccoli because it is good for us, they can’t pass a law that makes it a crime not to eat broccoli. But they can tax us for not eating broccoli.

[Roberts]

In other words, as long as it is just a tax on not taking any action, it is OK. If not taking any action violates the law, it is not OK.

Thus, if the government wants us to eat broccoli because it is good for us, they can’t pass a law that makes it a crime not to eat broccoli. But they can tax us for not eating broccoli.

It's a bizarre situation. I don't want to get political on this board but with what's happened in the last 10 years (both parties so I'm not advocating a side), if we ever elect a guy like Chavez or Putin, we're in serious trouble. Congress has handed the President authorities that while they aren't currently being abused, they could be very easily. VERY easily. This is just one of several problem decisions and courses of action.


[steps off soap box]

[ChEAr$]

EDIT: Just realized that Justice Roberts ruling stats that the tax / penalty is applied only to those households that have a federal tax burden. If you have no federal tax burden, you are not subject to this potential tax.

Did Mr Justice Roberts define what "federal tax burden" really means?
Income tax only liability? Income tax plus AMT? That total less applicable credits?

Hmmm, wait a minute YOUR name is Roberts, too! (grin

[Roberts]

Did Mr Justice Roberts define what "federal tax burden" really means?
Income tax only liability? Income tax plus AMT? That total less applicable credits?

Hmmm, wait a minute YOUR name is Roberts, too! (grin

I didn't see he defined it that closely. I would imagine he considers it the Income tax PLUS AMT but that's just my opinion of how the IRS and Congress thinks. If you have $1 in federal tax paid this year, the question I'd have are you subject to $1 of or the entire health care tax?

[Jiggers]

Tax based on income. What about those that don't have to file a return?

Of course they already have free insurance that I AM HAVING TO PAY FOR!


Sorry!

[Golden Rocket]

Not Partisan

This is not a partisan comment, but neither is it tax-related. I state it only to educate readers of history and not slant the dialogue.

I assume you are referring to the recent Presidential proclamation which essentially brought the "Dream Act" for immigrants into reality. History here: Every single President since George Washington has invoked "Executive Privilege" at one time or another during their presidency.

Presidential "proclamations" however, have been around only since 1972, when Nixon was president. Nixon opposed the action on constitutional grounds and stated that this just "gives Congress an excuse" to have a Presidential decree on issues for which Congress was afraid to expose their voting record. There have been numerous such Presidential "decrees" - you might remember the Bush II decree which mandated the use of Ethanol in 90% of the gasoline sold in the United States. Or his other decree which prevented Medicare from negotiating drug prices with pharmaceutical corporations. Some decrees have only "reversed" decrees from previous presidents.

Above is not a partisan statement, but relevant to the issues at hand. If deemed to be inappropriate, or starts a chain reaction of politically biased comments, please remove.