Individual Mandate in President’s Health Care Plan Apparently Violates Obama’s Tax Pledge

By Matt Cover | March 2, 2010 | 10:05 AM EST

President Barack Obama delivers a statement at the White House on the budget that he sent to Congress on Monday, Feb. 1, 2010. (AP Photo/Pablo Martinez Monsivais)

( – The individual health insurance mandate included in President Barack Obama’s recently unveiled health care proposal apparently would violate the president’s own pledge not to raise any taxes on any American making less than $250,000 per year.
The president’s plan, presented as a general outline last week, is based on the bill passed by the Senate last Christmas, a bill that contained a mandate requiring every American to carry health insurance. The Senate bill also included a financial penalty for anyone who goes without health insurance coverage for any month of the year.
It is that penalty which, if signed into law by Obama, reportedly would violate his pledge not to raise taxes on any American making less than $250,000 per year.
In his first address to Congress in February 2009, Obama said that for Americans making below the $250,000 mark, their taxes would not go up “one single dime.”
“If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime,” Obama declared.
However, the Senate legislation on which his plan is based states: “If an applicable individual fails to meet the requirement of subsection (a) [have health insurance] for 1 or more months during any calendar year beginning after 2013, then … there is hereby imposed a penalty with respect to the individual in the amount determined under subsection (c) [$750].”
President Obama, in an interview last fall with George Stephanopolous, host of ABC’s  “This Week” program, disputed that this was a tax. Obama accused the host of “stretching” when Stephanopolous read the dictionary definition of a tax.
“(F)or us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase,” Obama said. “George, you -- you can't just make up that language and decide that that's called a tax increase.”
Stephanopolous read the Merriam Webster’s definition of a tax to the president, eliciting further denials from Obama that the mandate penalty was a tax.
“Merriam-Webster's dictionary:  ‘Tax, a charge, usually of money, imposed by authority on persons or property for public purposes,’” Stephanopolous recited.
“George, the fact that you looked up Merriam's dictionary, the definition of tax increase, indicates to me that you're stretching a little bit right now,” Obama said. “I absolutely reject that notion.”
However, the Senate bill – in creating the individual mandate penalty – amends the Internal Revenue Code, the nation’s tax law. In particular, it amends Subtitle D of the Internal Revenue Code, the section of the law that defines the nation’s “Miscellaneous Excise Taxes.”
The Senate bill would add a 17th chapter to Subtitle D, which already includes taxes on manufacturers, petroleum products, lobbying, and so-called “golden parachute” compensation plans for failed corporate executives.
“The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 47 the following new item: “CHAPTER 48—MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE.”,” the law states.
In fact, the bill stipulates that the penalty will be collected in the same manner as other excise taxes are collected, referencing the section of the Internal Revenue Code that outlines how the government must handle those who do not pay their taxes. That section, Chapter 68, is entitled, “Additions to the Tax, Additional Amounts, and Assessable Penalties.” The Senate bill specifically refers to Subtitle B of Chapter 68, which is entitled “Assessable Penalties.”
“IN GENERAL.—The penalty provided by this section shall be paid upon notice and demand by the Secretary, and except as provided in paragraph (2), shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.”
In yet another provision that seems to contradict Obama’s contention that the individual mandate penalty is not a tax, the legislation specifically exempts those who do not pay their mandate penalties from the criminal penalties and tax liens and levies normally assessed against those who do not pay taxes.
In other words, because the law says the penalty for not having insurance will “be assessed and collected in the same manner” as other tax penalties, it must exempt those who do not pay from certain penalties they would other wise be subject to.
Finally, the law amends the legal definition of a tax return, adding in a requirement that Americans include their health insurance status on their personal income tax returns.