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A Toxic Combination

Obamacare meets the IRS

Jun 3, 2013, Vol. 18, No. 36 • By JEFFREY H. ANDERSON
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Of all the scandals in his administration that President Obama knows nothing about, the one Americans find most appalling is the decision by the Internal Revenue Service to target the president’s political adversaries. What’s more, as subsequent congressional testimony has made clear, the IRS isn’t particularly repentant about its actions.

Obamacare

One thing Republicans and Democrats should therefore be able to agree on is that this is no time to significantly expand the IRS’s power. Yet that is exactly what will happen under Obamacare if no action is taken. A simple proposal: Remove the IRS from any role in implementing or enforcing Obamacare. It would be hard to argue at this juncture that the IRS is up to the job.

Such legislation has been introduced by Sen. John Cornyn (R.-Texas) and Rep. Tom Price (R.-Ga.). Price, a doctor, sensibly writes, “When it comes to .  .  . health care decisions, no American should be required to answer to the IRS—an agency that just forfeited its claim to a reputation of impartiality.”

Under Obamacare, the IRS is set to acquire expansive new powers. A Treasury Department audit concludes that, of the “over 500 provisions” of Obamacare, nearly a tenth involve the IRS. The Treasury audit reads, “Implementation of [Obamacare] presents a major challenge to the IRS as [it] represents the largest set of tax law changes in more than 20 years and affects millions of taxpayers.” As Treasury inspector general J. Russell George put it, “The IRS must ensure that all the information needed to accurately and effectively administer these provisions is provided by employers, insurers, and taxpayers,” so as “to manage the burden placed on employers, insurers, and taxpayers who must comply with the various [Obamacare] requirements.”

How impartially will the IRS do its job? According to the plain language of the Obamacare legislation, its taxpayer-funded subsidies (approaching $1 trillion over the next decade) can only flow into its state-established exchanges, not its federally established ones. The Congressional Research Service says that “this language seems to be straightforward on its face.” 

But instead of simply enforcing the law as written, the IRS has obsequiously deferred to the position expressed in other quarters of the Obama administration: that the textual language isn’t binding. After all, only 17 states opted to run their own exchanges. Accordingly, the IRS has ruled that federally established exchanges will get the money as well. (Legal challenges are proceeding.)

Meanwhile, to exercise its newfound powers under Obamacare, the IRS has requested $440 million and 1,954 additional full-time equivalent employees for fiscal year 2014. That’s just for its Obamacare operations. Viewed in a certain light, this seems a reasonable request—for the taxman will be busy. According to the Congressional Budget Office, the loot that the IRS will be responsible for collecting over the 10-year span from 2014 to 2023 will total $1.2 trillion. That tally is solely for Obamacare taxes and penalties.

This total includes penalties on Americans who refuse to purchase federally approved health insurance. (Thanks to last year’s decree by Health and Human Services secretary Kathleen Sebelius, such insurance must include “free” coverage of birth control, sterilization, and the abortion drug ella, but not “free” heart medicine, cancer treatments, and the like.) It also includes penalties on businesses and charities that refuse to offer such federally approved insurance, as well as taxes on high-premium insurance plans, taxes on hospital insurance, and taxes on medical equipment.

Under Obamacare, however, the IRS will move beyond the realm of simple tax collection. To quote from the Treasury audit:

Section 9007 [of Obama­care] requires charitable hospitals to conduct a community health needs assessment at least once every three years and adopt an implementation strategy to meet the community needs identified through the assessment. The IRS is responsible for reviewing, at least once every three years, the community benefit activities of each hospital affected by this provision.

So the judge of whether hospitals are meeting community needs will be the IRS. What could possibly go wrong? (On the heels of Sebelius’s earlier decrees, one wonders how the IRS will treat Catholic hospitals.)

The Treasury audit also notes that the IRS will be responsible for ensuring “that tax credits for cellulosic biofuel are not allowed for fuels with significant water, sediment, or ash content.” Yes, that’s covered by Section 1408 of Obama-care. (Not for nothing is it 2,700 pages long.)

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