The IRS and the health care mandate

The Tax Police and the Health-Care Mandate - Americans of modest means may soon get a lesson in the power of the IRS

Excerpt:

The original House bill opened the door for criminal sanctions against Americans who didn't buy health insurance and pay the penalty. The Senate bill did the same until Sen. John Ensign (R., Nev.) successfully pushed to amend the bill. Even so, the final language begs the question that Mr. Shulman and Mr. Weiner avoided: Who's going to enforce the mandate, and how?

It's more than a theoretical proposition. Approximately one in six drivers goes without auto insurance, according to the Insurance Research Council, even though most states require it. As for health coverage, the U.S. Census says that Massachusetts' has the nation's lowest rate of uninsured at 5.4%, thanks in part to its own individual mandate. Even so, costs have exploded and fines for not carrying coverage are increasing.

Almost by definition, those hit by the mandate will be either young people starting out, or those working for smaller businesses that do not provide employees with health coverage. Back in November, a report by the Congressional Budget Office and Joint Committee on Taxation estimated that nearly half (46%) of the mandate penalties will be paid by Americans under 300% of the poverty line.

In today's dollars, that works out to $32,500 for an individual. For a family of four, it's $66,150. Generally speaking, these are not the folks who have to worry about paying taxes on, say, a villa in the Dominican Republic or income from the International Monetary Fund.

So we are left with one of two possibilities. The first is that the penalty for not having "minimal essential coverage" is fully enforced, in which case Americans of relatively modest means will get a lesson in how the government deals with people who don't pay up.

Or the penalty for violating the individual mandate will become like the fines for not filling out your Census form. In other words, unenforced. In that case, the costs of this legislation will be even higher and more hidden than we have been led to believe.

Comment: I found the 1 in six without auto insurance interesting!