Obamacare expands IRS authority, may cause greater tax non-compliance 

Not only does the Democratic health care bill include tax hikes, as reported by Americans for Tax Reform, it also would expand the role of the Internal Revenue Service. From Kaiser Health News:

Under the proposed health care legislation, they would get another assignment: checking to see whether Americans have health insurance.

The House and Senate bills require most Americans to have health insurance and to prove it on their annual federal tax return. Those who don’t would pay a penalty to the IRS.


The agency also would distribute as much as $140 billion a year in new government subsidies to help small employers and as many as 19 million lower-income people buy coverage.

In addition, the IRS would collect hundreds of billions of dollars in new fees on employers, drug companies and device makers, according to the non-partisan Congressional Budget Office (CBO).

Some critics of the health bill question whether the IRS, which has struggled in recent years with budget problems, staffing shortages and outdated computer systems, will be up to the job of enforcing the mandate and efficiently handling the subsidies.

But that's not the only creepy part. That penalty may effectively encourage tax noncompliance among young people who would find it cheaper to pay a fee than get insurance, as AmSpec's Phil Klein notes:

The individual mandate won't affect most Americans, who are already covered either through existing government programs or through their employers. Those most inclined to be uninsured by choice -- and thus likely to be most resistant to the mandate -- are the so-called "young invincibles" who have low health care costs and can't justify paying the expensive monthly premiums. In fact, according to Census Bureau, 8 million of the uninsured are between 18 and 24 years old and 10 million are between 25 and 34. Members of this subgroup are also more likely to work on their own, or do cash intensive jobs such as bartending or waiting tables, where it's easier to float below the radar and avoid filing tax returns. Though it's difficult to quantify, it would seem that individuals in this position would be less likely to file tax returns after Obamacare is implemented if doing so meant the added burden of presenting proof of health insurance, or facing an additional tax penalty.

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J.P. Freire

J.P. Freire is the associate editor of commentary. Previously he was the managing editor of the American Spectator. Freire was named journalist of the year for 2009 by the Conservative Political Action Conference (CPAC). You can follow him on Twitter here. Besides the Spectator, Freire's work has appeared in... more
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