TPM Editor’s Blog

Who Pays?

President Barack Obama

It’s very clear now that the immediate consequence of the Supreme Court’s health care ruling will be another Pavlovian “tax!” chant from the GOP.

We’ve run through how this is only true in a narrow technical sense. A perfectly executed mandate — like an ideal carbon or cigarette tax — would raise $0. The goal is to change behavior not to generate revenue. This is not, in spirit, the sort of “tax increase” Republicans want you to believe it is, and to the extent they’re right, well then Mitt Romney raised the exact same tax in Massachusetts.

But whatever you want to call it — tax, fee, penalty, incentive, Robert — even though it does raise some money, the key is that it will snag relatively few people. Citing CBO, the Court noted “it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. … It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance.”

Four million. A bit more than one percent of the population. And remember, these are people who are able to afford insurance but choose not to, knowing they’ll eventually need to avail themselves of the health care system. It’s actually fair to think of it as a free-rider penalty. That’s harder to explain than simply screaming “tax,” but it’s true, and much less politically contentious.

Brian Beutler

Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at brian@talkingpointsmemo.com.

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