Fact Checking the Fact Checkers (Again…)
The Washington Post has another “Fact Checker” column this morning, which purportedly verifies Administration claims that Obamacare represents a net tax cut. To put it most charitably, that depends upon what the meaning of the term “tax cut” is.
As we previously noted earlier this week, the vast majority of the supposed “tax cuts” for health insurance will go to individuals with ZERO income tax liability. The fact checker column cites Congressional Budget Office data indicating the law will provide $630 billion in insurance subsidies over the 2013-2022 time frame. That assertion is both incorrect and misleading. First, CBO projects total spending on insurance subsidies will total $806 billion during FY2013-22, not the $630 billion the Post claimed. But more importantly, $628 billion of that $806 billion is classified by CBO as government spending, NOT reduced tax revenues. What that means is 78% of Obamacare insurance subsidies are pure government spending to individuals who have no income tax liability – NOT “tax cuts.”
Some may claim that the subsidies are a tax credit offsetting federal payroll taxes paid by low-income individuals. This obscures two obvious facts. First, low-income individuals on average get all their payroll taxes back in the form of Social Security and entitlement benefits – in fact, they already get more back than they pay in, which is why Medicare and Social Security are in such financial distress. Second, the size of the subsidy – averaging $5,210 per person in 2016 – will be FAR more than most low-income individuals will pay in payroll taxes each year.
On a somewhat related note, the Obama campaign yesterday referred to the individual mandate tax as a “freeloader penalty.” Which raises an interesting question: If millions of middle-class families who will be taxed because they cannot afford health insurance are “freeloaders,” what does the Obama Administration call the millions of Americans who will be receiving “tax cuts” even though they have no income tax liability – and quite possibly no net tax liability whatever…?