Is Obamacare a Tax or a Penalty?

March 25th, 2014

Obamacare’s magical “tax” reared its ugly head in Hobby Lobby, courtesy of Justice Sotomayor.

First, she said the tax at issue was a lot less than the penalty in Obamacare–or is it a tax!

But isn’t there another choice nobody talks about, which is paying the tax, which is a lot less than a penalty and a lot less than ­­ than the cost of health insurance at all? These employers could choose not to give health insurance and pay not that high a penalty ­­– not that high a tax.

Later, she and the Chief Justice had some fun about whether it was a penalty or tax.

JUSTICE SOTOMAYOR: It’s not called a penalty. It’s called a tax. And it’s calibrated ­­ and it’s calibrated ­­ CHIEF JUSTICE ROBERTS: She’s right about that. (Laughter.)

Too soon Chief, too soon.

To be precise, in this context, it is a penalty, because the saving construction in NFIB only applied to the individual mandate, not the employer mandate.

Clement responded, perfectly.

MR. CLEMENT: And it has been treated for some purposes as a penalty. And I think for this purposes, it certainly feels punitive. And if I could finish the thought about why it’s a false comparison…

And in the process, Kagan (subtly) noted that many employers are dumping their employees onto the exchanges by cancelling coverage.

There are employers all over the United States that are doing this voluntarily because they think that it’s less.

Well, it is cheaper, by design. Obamacare aims to cancel plans and put people onto exchanges.

 

 

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