Already a Bloomberg.com user?
Sign in with the same account.
In the lexicon of political insults, accusing somebody of raising taxes ranks up there as one of the worst. So it’s easy to see why Barack Obama and Mitt Romney have spent the past week twisting themselves into semantic contortions over whether the Supreme Court’s decision to uphold the Affordable Care Act’s insurance mandate because it’s a tax means that the mandate is, in fact, a tax (Romney), or that it’s still a penalty being called a tax (Obama).
Amid all the sniping in the Land of Make-Believe, it’s easy to forget that in the real world, it doesn’t matter. Whatever you call it, there’s zero difference between a tax, a penalty, a fine, or a fee. The Supreme Court ruling changed nothing about the mandate. The cost of flouting it is exactly the same as it was before the decision: $695 per person, or 2.5 percent of income. The number of people who will forgo insurance—an estimated three million—hasn’t changed either. Neither has the task of administering the mandate. That woeful job falls onto the shoulders of the IRS.
The disconnect from reality has led to increasingly bizarre feats of logic. The Romney campaign sent out an e-mail Thursday with the subject line: “Obama Campaign Declares Obamacare Unconstitutional.” The reasoning—if you can call it that—is that Obama’s insistence that the mandate is a penalty means that he disagrees with the Supreme Court and therefore, according to Romney, believes the law is unconstitutional. Not only is that absurd, it’s even odder to see Romney attacking Obama for supposedly contradicting himself here: Romney’s camp had done the exact same thing two days before, when Romney, who had previously said the mandate was not a tax, switched positions and now says it is.
What does the IRS have to say about the merits of the two arguments? Not a word. The agency’s officials have gone into hiding since the ruling. IRS Commissioner Douglas Shulman has testified before Congress over the past year about how his agency is getting ready to enforce the law. The issue of the mandate being a penalty or a tax doesn’t do anything to change that. Nonetheless, when I asked how the agency was preparing for the mandate, I was bounced back and forth between two spokespeople who each said the other was the only one authorized to comment. After three days, I was finally told the agency would not be answering any questions.
Come 2014, a relatively small number of Americans will have to pay something—a penaltax or taxalty, as the Washington Post’s Karen Tumulty brilliantly puts it—to the IRS. Many more, however, will get some kind of assistance to help them buy health-care coverage. Which means that sometime soon we can look forward to a long, nasty debate in Washington over whether that payment is a subsidy, a credit, a tax cut, or some form of welfare.