Friday, July 6

Why is the penaltax in Obamacare so low?

There's a well-known unethical ploy in bidding for a contract: Bid a lot less than you think it'll actually cost to perform, but try to insert lots of "loophole" provisions into the text that will allow you to "adjust" (i.e. raise) what you wind up charging the client.

This tactic--again, absolutely unethical--is found in areas as different as roofing and paving to software to military weapons systems.

One place you might not expect to find it is...government.

Think again. Politicians are no more ethical than anyone else--and probably average a lot less. So when a pol says "All these wunnerful benefits will only cost you X," you can be sure you're getting a lowball bid.

Example: When the federal income tax was introduced, the law said the min and max rates would be 1% and 7%, respectively. By 1965 the federal income tax rate on the highest incomes had made it to a staggering 90 percent.

Or consider Social Security: When the bill was passed into law, the amount forcibly taken from the employee's paycheck was set at about 3 percent. That later rose to 6.2%, with the employer paying another 6.2, though the govt cut the employee tax to 4.2% a year or so ago as a vote-buying...uh, stimulus measure.

And since the amount paid by the employer has to come from somewhere, SS really takes over ten percent of your income. And before the cut it was one-eighth of your income.

Now, it's true that SS protects people from their own failure to plan for retirement. The issue here is that the pols said it would only cost X and a few decades later it ends up costing five or six times that.

With this brief history in mind, consider the tax (or penalty--whichever they need it to be today) imposed on those who decline the government's command to buy health insurance. For a margarita of your choice, do you know how much that is?

Surely this was discussed ad nauseum in your local paper, and on the nightly news, right? I mean, this is a crucial aspect of a law that seeks to bring another one-sixth of the economy under federal control, so we had to know what it purported to do in order to know what to tell our representatives about whether we wanted them to vote for it, right?


What, you mean congress passed this sonofabitch without anybody even knowing what was in it??

Wow. Can't believe everyone voting aye wasn't shot or hanged within days.

Ah well... If I understand correctly, the penaltax is set in the statute at $695.

Now, if you're over 30 or so, a reasonable catastrophic health insurance plan for a single individual runs at least $500 a month. For a family, at least $1200 a month.

So why would the Dem congresswhores who drafted this bastard (Republicans had zero input, despite numerous tries) deliberately set the penaltax at such a tiny fraction of the cost of actually buying insurance? Wasn't that a guarantee of bankrupting the program, since the penaltax wouldn't begin to cover the gummint's cost of providing commercial insurance?

The reason is that the Dem congresswhore authors knew passage was gonna be close, and that lots of Dem reps would be afraid to vote for the thing if the penaltax was closer to the $10,000 or $12,000 needed to for the gummint to provide health insurance for a family for a year.

So they lowballed it. Like, setting the penaltax at something like six percent of what was needed for fiscal soundness.

Because, gentle reader, even though the *nominal* reason for the penaltax is to generate revenue to fund the cost of providing health insurance for those who decline to buy it, its real purpose is...compliance with this new arbitrary law.

Let me say that again: It's not compliance as in, you buy health insurance if you don't already have it. Rather, it's that if you don't have it, you "voluntarily" (see what I did there?) admit this to the IRS and pay the nominal penaltax. And the gummint takes your hand from there.

Once almost everyone who doesn't have health insurance has confessed and agreed to pay the penaltax, the bureaucrats can increase the penaltax to any desired amount.

Sorta like the income tax rate.


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