CBO: Health-Law Tax to Hit 50% More Than Estimated

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Published September 20, 2012

| FOXBusiness

The nonpartisan Congressional Budget Office now says six million people will have to pay the individual mandate tax at a higher estimated cost of $6.9 billion to $8 billion, once ObamaCare rolls out in its entirety in 2016.

That’s two million more people getting hit with the new tax, or a 50% jump, versus what the CBO initially estimated in 2010, right after President Barack Obama inked his signature health reform into law.

Plus the CBO now says the government’s take from the new tax will be $4 billion to $5 billion more per year than initially expected -- and that is a middle-class tax hike the White House doesn't want to discuss.

To read the CBO’s report, click here.

Americans without health insurance are expected to pay an average $1,200 mandate tax in 2016.

Health insurance costs on average $15,500 annually for families and $4,200 for singles, coverage Americans must have by 2014 under the new law.

The CBO’s analysis shows 80% of the six million expected to be hit with the new tax sit right in the middle class, even though the president promised not to hike taxes on singles earning less than $200,000 a year and couples earning less than $250,000.

The new analysis from the CBO and the Joint Committee on Taxation (JCT) shows the tax will hit families and singles who earn up to five times the federal government’s poverty level. So, families earning $123,000 will have to pony up this new tax, and so will singles who earn $60,000.

Moreover, the new tax squeezes families at even lower income levels, the CBO and JCT note.

As of 2016, households with at least $98,400 in annual income will represent “about one-third of people paying” the new tax, but they will fork over a whopping “two-thirds of the receipts” from the new tax, receipts being the federal government’s revenues from the new mandate tax.

The reason for the jump in people getting taxed? More unemployed (meaning no coverage), plus the new law lets states opt out of the law's Medicaid expansion, triggering the tax.

The Administration has said it may exempt low-income earners in states that opt out.

And that’s the problem with the roll out of the new law. Federal workers will get to pick and choose who must pay the mandate tax, under ad hoc rules made up on the fly, leaving the Administration vulnerable once again to charges of favoritism.

The CBO along with the JCT now say “the vast majority" of the 30 million uninsured will be exempt from the new tax, 18 million to 19 million, because they will qualify for government exemptions from paying the new mandate tax.

This raises anew an earlier controversy, where the Administration granted waivers to about 1,200 unions and businesses for one year from a new requirement that they must phase out inexpensive, bare bones health coverage, known as "mini-meds." The law forces more comprehensive coverage by 2014. 

The law says the government can grant exemptions on the mandate tax to the poor or Indian tribes, and illegal immigrants who can’t get Medicaid or insurance through new state health exchanges.

But the CBO and JCT add that 18 million to 19 million increases even further, by another 6 million, to 24 million exemptions, after the government gets done granting even more waivers for people claiming the mandate tax creates "hardship," or that it violates their constitutional right to their religious beliefs, including individuals with religious objections to insurance requirements.

That leaves about six million paying the mandate tax because they are uninsured in 2016.

The federal government is expected to collect about $7 billion from these Americans in 2016, rising to an average $8 billion in tax per year over the 2017 to 2022 period, the CBO says.

The government is already facing numerous requests for exemptions from the mandate tax on constitutional grounds. That includes individuals who filed a case called the “Anti-Socialism Religious Objector-Free Exercise Clause.”

Documents show that Tracie Pistocco and Christopher Hansen have argued that health reform is part of a socialistic belief system that is a “form of state religion that conflicts with the free exercise clause of the first amendment,” arguing they should not be forced to “contribute charitable funds to a socialist religion through the annual shared responsibility payment,” according to analysis of objections by Rutgers University.

So, with all those exemptions ... what was the Supreme Court fight about again?

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