Skip to main content
Part of complete coverage on
 

Tax or penalty, does it matter for Romney and Obama?

By Tammy Frisby, Special to CNN
updated 8:56 AM EDT, Fri July 6, 2012
STORY HIGHLIGHTS
  • Tammy Frisby: Republicans, Democrats argue if the individual mandate is a tax or penalty
  • Frisby: Debate over the tax status has little effect on who wins the White House
  • She says the health care law includes tax increases much higher than the mandate
  • Frisby: Conservatives have already won on the mandate issue, as indicated by polls

Editor's note: Tammy Frisby, a research fellow at the Hoover Institution, teaches politics and public policy at Stanford University.

(CNN) -- For the past week, the political fireworks surrounding the landmark decision by the Supreme Court to uphold the Affordable Care Act rivaled the excitement of Independence Day pyrotechnics.

President Obama is facing heavy criticism from Republicans that he has raised taxes on working- and middle-class Americans because the court upheld the individual mandate based on Congress' power to tax. The president and the Democrats are arguing that the mandate is not a tax but rather a penalty, since those who do not buy health insurance are paying a penalty in the form of a tax.

Meanwhile, on Monday a top adviser to Mitt Romney raised consternation among Republicans by saying that the individual mandate is not a tax, countering the prevailing conservative view.

Tammy Frisby
Tammy Frisby

Soon after, Romney himself made his much anticipated statement on the issue on TV, saying that since the Supreme Court has declared that the individual mandate is a tax, then it must be a tax.

Tax? Not a tax? What's going on?

The fact of the matter is this: As for who wins the White House, there is probably very little at stake for either Romney or President Obama in the debate over the tax status of the individual mandate.

Mandate a loophole for lobbyists?
Is health care mandate a tax... or not?

However the mandate is enforced -- as a tax or as a penalty -- it is a rounding error in the total tax increases in the Affordable Care Act.

The Congressional Budget Office estimates the individual mandate will raise $17 billion in revenue for the Treasury between 2015, when the first taxes or penalties would be collected under the provision, and 2019.

Aside from the individual mandate, the health care law includes numerous tax increases, for a total of more than $400 billion between 2010 and 2019, according to estimates by the Joint Committee on Taxation.

About half that amount, $210 billion over 10 years, comes from the increase in the Medicare payroll tax and a new Medicare tax on interest, rent and other investment income for individuals who earn more than $200,000 or families that earn $250,000 annually.

But other changes that raise Americans' tax bills include the reduction in the maximum annual contribution -- now capped at $2,500 -- to Health FSAs (your employer might call it your "cafeteria plan" to help pay for medical expenses). There is also an increase in the percent of your income that you must spend on medical expenses before those expenses are tax deductible, up to 10% from 7.5%. These two provisions taken together will raise taxes by about $28 billion over the law's first decade.

By 2019, the year when all the health care law's tax increases will be in effect, the taxes raised by the Affordable Care Act are estimated to be 0.49% of GDP. That is the 10th largest tax increase since 1950. In 2019, it will be the largest tax increase in the 26 years since Bill Clinton's 1993 tax increases.

Whether the $17 billion from the individual mandate is a tax is hardly necessary for the Republicans to argue that President Obama raised taxes. Nor does the mandate being a penalty clear the president's record on taxes.

The Obama administration and Democrats point out that the Congressional Budget Office has estimated the health care law will reduce total annual budget deficits between now and 2021. There is considerable controversy over the estimate of the effect of the health care law on deficits, but that aside, it will raise taxes -- and a lot of them.

Some Republicans insist that campaigning against the president on the individual mandate as a tax is still important. Because while most of the taxes are levied on employers, corporations and high-earners (including small businesses), the individual mandate is a direct tax on low- and middle-income Americans. If the mandate is a tax, they argue, the president has broken his pledge not to raise taxes on working- and middle-class Americans.

But, in the court of public opinion, conservatives have already won on the issue of the individual mandate.

Time and time again, when polled over the last two years, a majority of Americans have opposed the national requirement to buy health insurance. Looking at self-identified independent voters, those swing voters who decide elections, a March 2012 Kaiser Family Foundation survey found that only 32% supported a mandate with a "penalty" for noncompliance.

While the charge that "you raised taxes on hard-working Americans" is a good go-to move in American politics, it might not be possible for Republicans to gain more political advantage off the individual mandate than they already have.

So what will matter to voters on Election Day? How about principled arguments about what "good government" looks like and the proper balance between personal economic security and individual liberty? And what about a clear, concrete vision for returning prosperity to working- and middle-class America?

Those can be winning issues. For one of the candidates and for all Americans.

Follow us on Twitter @CNNOpinion

Join us on Facebook/CNNOpinion

The opinions expressed in this commentary are solely those of Tammy Frisby.

ADVERTISEMENT
Part of complete coverage on
updated 9:29 AM EDT, Mon October 20, 2014
Cornell Belcher says the story of the "tea party wave" in 2010 was bogus; it was an election determined by ebbing Democratic turnout
updated 4:12 PM EDT, Mon October 20, 2014
Les Abend says pilots want protocols, preparation and checklists for all contingencies; at the moment, controlling a deadly disease is out of their comfort zone
updated 11:36 PM EDT, Sun October 19, 2014
David Weinberger says an online controversy that snowballed from a misogynist attack by gamers into a culture war is a preview of the way news is handled in a world of hashtag-fueled scandal
updated 8:23 AM EDT, Mon October 20, 2014
Julian Zelizer says Paul Krugman makes some good points in his defense of President Obama but is premature in calling him one of the most successful presidents.
updated 10:21 PM EDT, Sun October 19, 2014
Conservatives can't bash and slash government and then suddenly act surprised if government isn't there when we need it, writes Sally Kohn
updated 8:28 AM EDT, Mon October 20, 2014
ISIS is looking to take over a good chunk of the Middle East -- if not the entire Muslim world, write Peter Bergen and Emily Schneider.
updated 9:00 AM EDT, Mon October 20, 2014
The world's response to Ebola is its own sort of tragedy, writes John Sutter
updated 4:33 PM EDT, Fri October 17, 2014
Hidden away in Russian orphanages are thousands of children with disabilities who aren't orphans, whose harmful treatment has long been hidden from public view, writes Andrea Mazzarino
updated 1:22 PM EDT, Sat October 18, 2014
When you hear "trick or treat" this year, think "nudge," writes John Bare
updated 12:42 AM EDT, Sat October 18, 2014
The more than 200 kidnapped Nigerian schoolgirls have become pawns in a larger drama, writes Richard Joseph.
updated 9:45 AM EDT, Fri October 17, 2014
Peggy Drexler said Amal Alamuddin was accused of buying into the patriarchy when she changed her name to Clooney. But that was her choice.
updated 4:43 PM EDT, Thu October 16, 2014
Ford Vox says the CDC's Thomas Frieden is a good man with a stellar resume who has shown he lacks the unique talents and vision needed to confront the Ebola crisis
updated 4:58 AM EDT, Sat October 18, 2014
How can such a numerically small force as ISIS take control of vast swathes of Syria and Iraq?
updated 9:42 AM EDT, Fri October 17, 2014
How big a threat do foreign fighters in Syria and Iraq pose to the West? It's a question that has been much on the mind of policymakers and commentators.
updated 8:21 AM EDT, Fri October 17, 2014
More than a quarter-million American women served honorably in the Iraq and Afghanistan wars. Now they are home, we have an obligation to help them transition back to civilian life.
updated 4:27 PM EDT, Thu October 16, 2014
Paul Begala says Rick Scott's deeply weird refusal to begin a debate because rival Charlie Crist had a fan under his podium spells disaster for the Florida governor--delighting Crist
updated 12:07 AM EDT, Thu October 16, 2014
The longer we wait to engage on Ebola, the more limited our options will become, says Marco Rubio.
updated 7:53 AM EDT, Wed October 15, 2014
Democratic candidates who run from President Obama in red states where he is unpopular are making a big mistake, says Donna Brazile
updated 12:29 AM EDT, Thu October 16, 2014
At some 7 billion people, the world can sometimes seem like a crowded place. But if the latest estimates are to be believed, then in less than a century it is going to feel even more so -- about 50% more crowded, says Evan Fraser
updated 12:53 PM EDT, Mon October 20, 2014
Paul Callan says the Ebola situation is pointing up the need for better leadership
updated 6:45 PM EDT, Wed October 15, 2014
Nurses are the unsung heroes of the Ebola outbreak. Yet, there are troubling signs we're failing them, says John Sutter
updated 1:00 PM EDT, Wed October 15, 2014
Dean Obeidallah says it's a mistake to give up a business name you've invested energy in, just because of a new terrorist group
updated 7:01 PM EDT, Wed October 15, 2014
Fear of Ebola is contagious, writes Mel Robbins; but it's time to put the disease in perspective
updated 1:44 PM EDT, Tue October 14, 2014
Oliver Kershaw says that if Big Tobacco is given monopoly of e-cigarette products, public health will suffer.
updated 9:35 AM EDT, Sat October 18, 2014
Stop thinking your job will make you happy.
updated 10:08 PM EDT, Tue October 14, 2014
Ruben Navarrette says it's time to deal with another scandal involving the Secret Service — one that leads directly into the White House.
updated 7:25 AM EDT, Tue October 14, 2014
Americans who choose to fight for militant groups or support them are young and likely to be active in jihadist social media, says Peter Bergen
updated 9:03 AM EDT, Mon October 13, 2014
Stephanie Coontz says 11 years ago only one state allowed same sex marriage. Soon, some 60% of Americans will live where gays can marry. How did attitudes change so quickly?
updated 4:04 PM EDT, Tue October 14, 2014
Legalizing assisted suicide seems acceptable when focusing on individuals. But such laws would put many at risk of immense harm, writes Marilyn Golden.
updated 9:07 AM EDT, Mon October 13, 2014
Julian Zelizer says the issues are huge, but both parties are wrestling with problems that alienate voters
updated 6:50 PM EDT, Mon October 13, 2014
Mel Robbins says the town's school chief was right to cancel the season, but that's just the beginning of what needs to be done
updated 11:43 AM EDT, Sat October 11, 2014
He didn't discover that the world was round, David Perry writes. So what did he do?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT