Commentary Magazine


Depends on What the Meaning of “Tax” Is

Obama may have finally hit a trip wire on the credibility front by denying that to fine those who do not buy health insurance is to tax them. George Stephanopoulos didn’t buy the president’s wordplay. Neither did the Associated Press:

Memo to President Barack Obama: It’s a tax. Obama insisted this weekend on national television that requiring people to carry health insurance—and fining them if they don’t—isn’t the same thing as a tax increase. But the language of Democratic bills to revamp the nation’s health care system doesn’t quibble. Both the House bill and the Senate Finance Committee proposal clearly state that the fines would be a tax.

And the reason the fines are in the legislation is to enforce the coverage requirement.

“If you put something in the Internal Revenue Code, and you tell the IRS to collect it, I think that’s a tax,” said Clint Stretch, head of the tax policy group for Deloitte, a major accounting firm. “If you don’t pay, the person who’s going to come and get it is going to be from the IRS.”

The AP points out that even Sen. Max Baucus calls it an “excise tax.” Others agree:

The House bill uses a complex formula to calculate the penalties, calling them a “tax on individuals without acceptable health care coverage.” People would report their insurance coverage on their tax returns.

The coverage mandate is part of a political bargain in which the insurance industry would agree to take all applicants, regardless of prior medical history.

“If we’re going to have coverage without regard to pre-existing conditions, it makes sense,” said economist Roberton Williams of the Tax Policy Center. “Otherwise people will come in the door the day they get sick.” He sees no distinction between the requirement to get coverage and the fines themselves.

Notice that these voices are not a bunch of right-wing dictionary hounds, but Democrats and tax gurus. The president is not leveling with us—again. It is precisely this sort of dissembling that renders his media offensive so ineffective. If he is going to come out and say things that diminish his own credibility and play into his opponents’ claims that he is not being honest with the voters, he may as well stay home on a Sunday morning.

It has a Clinton-esque feel (“Depends on what the meaning of is is,” he famously uttered in his deposition)—that of a president who is too clever by half and thinks verbal tricks can replace honest explanations. The danger is not simply that it undercuts his health-care message but that voters and even the sleepy media begin to wake up to the fact that lots of what he says isn’t true. Hey, Rep. Joe Wilson was rude, but he was on to something.