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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, March 19, 2010

House Health Care Bill 'Dangerously Expands IRS's Power'

Wall Street Journal, US House Republicans Say Health Bill Expands IRS Power:

House Republicans said Thursday that the health care overhaul will expand IRS authority by giving agents the power to verify acceptable health care coverage and fine or confiscate the tax refunds of Americans without coverage.

Republican members of the House Ways and Means Committee, a panel that oversees taxes and health issues, also charged that IRS audits will likely increase if health care legislation is passed. They added the IRS will require up to $10 billion to administer the new program. They also claimed the IRS may need to hire 16,500 additional employees.

"This dangerously expands IRS authority," said Representative David Camp, (R., Mich.), the ranking Republican on the Committee on Ways and Means. "Most Americans will find it shocking and troubling."

Prior TaxProf Blog coverage:

http://taxprof.typepad.com/taxprof_blog/2010/03/house-health.html

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Tracked on Mar 19, 2010 8:37:51 AM

Comments

One word: wow.

Posted by: oh please | Mar 19, 2010 6:39:37 AM

I wonder how many total new federal employees will have to be hired to help administer this monstrosity.
The talkers on the radio are right. This bill really is all about increasing government power.

Posted by: Elroy Jetson | Mar 19, 2010 8:02:08 AM

Maybe that is why they need to order those 60 short-barrelled Remington 870 shotguns. Gotta keep those not buying health insurance in line.

Posted by: J Richardson | Mar 19, 2010 8:17:47 AM

Countries with more laws and taxes have more lawbreakers and tax evaders. Lao Tzu

Posted by: Concerned Citizen | Mar 19, 2010 8:40:50 AM

Gee, giving the gummint/IRS even MORE power. What could possibly go wrong?

Posted by: Barbara Skolaut | Mar 19, 2010 8:43:00 AM

There are those who would argue it's a "feature" rather than a "bug."

Posted by: John Galt | Mar 19, 2010 8:43:19 AM

It's not a bug, it's a feature.

Posted by: Hyphenated American | Mar 19, 2010 9:10:42 AM

Where will the IRS find 16,500 unemployed proctologists?

Posted by: jt | Mar 19, 2010 9:27:10 AM

To the Democrats, this is a feature, not a bug. How else can the State exercise power over every aspect of our lives, for our own benefit? As a rancher cares for his cattle, so will the State care for its people.

Posted by: OCBill | Mar 19, 2010 11:10:04 AM

Rancher and his cattle
Politician and his people

Both can be transferred by box car.

Posted by: clue by four | Mar 19, 2010 12:16:28 PM

Help me with my fuzzy math. As the economy continues to tank the tax base shrinks. So Obama cracks the whip harder and gets the heavies at the IRS to lean on the people that still have some gold in their teeth. What happens when there are no more worker bees to extract gold from? Or, HOW THE HELL ARE YOU GOING TO PAY FOR THIS CRAP?

Posted by: robertsgt40 | Mar 19, 2010 12:54:15 PM

"Where will the IRS find 16,500 unemployed proctologists?"

hah!

Posted by: andy | Mar 19, 2010 1:13:42 PM

What they said:
The IRS will be
the TSA redux,
with riotguns
in the hands of
new recruits;
what could go
wrong ?

Posted by: M. Report | Mar 19, 2010 1:39:58 PM

Both India and China have a 0% capital gains tax.

The US will see a 3.8% increase due to the healthcare bill, on top of an expiry of the Bush Tax cuts.

FDR's socialism made the Depression 7 years longer than in needed to be. The same will happen here.

Posted by: Toads | Mar 19, 2010 5:04:00 PM

You know, "the state" actually leaves me alone for the most part, well, except for all the cheap water, transportation, and crime control purchased with economies of scale provided by group action. Oh! And of course the Army, Navy, Air Force, and National Guard - those federal operations seem to be going pretty well too.

You know what's not working out for me? The health insurance premiums that go up and up, the lack of choice provided by my employer, the drag on hiring imposed by the uncertainties of health care costs, and the relatives who've died of treatable diseases because of lack of access to health care. (One worked for a church that couldn't afford health care for employees, and one lost her job after a car accident, and then developed cancer.)

So I hear your point of view, but I think there's more to the story. I hope the moderator who posted all the above hysterical comments will post mine, because this isn't supposed to be a political site, is it?

Posted by: Liz | Mar 19, 2010 6:14:35 PM

Well Toads, there is a lot more to the story. Why do you suppose your premiums keep going up? Certainly the State's regulations preventing interstate competition between insurance companies would have nothing to do with it. And the nearly endless set of rules, regulations and associated paperwork imposed by government regulations? No way.

Over 50 cents of every health care dollar goes through the government. How expensive do you suppose it will be when all it's 100%?

Our military and overseas empire costs us a trillion dollars a year, half of which we must borrow. We have troops in over 150 countries and are engaged in two pointless, unjustified and arguably illegal wars. If this is your definition of "going pretty well" then there's this bridge I'd like to sell you.

I'm included to give you "cheap water", but transportation is hardly cheap, mostly due to multiple layers of taxation on production and fuel. As for "crime control", law enforcement predominant task is to try to solve crimes after they've already occurred. I would hardly refer to this as "control".

Posted by: Lucretius | Mar 19, 2010 7:00:22 PM

Well Toads, there is a lot more to the story.

First of all, water may be cheap, but transportation and "crime control"? Perhaps you have not noticed the price of fuel rising dramatically over the last few years. "Crime control"? What's that? Law enforcement, which is hugely expensive, spends most of it's efforts solving crimes, not preventing or controlling them.

Our military and overseas empire costs us a trillion dollars a year, half of which we borrow. We have troops in over 150 countries and are engaged in two pointless, unjustified and arguably illegal wars. Let's keep in minds that neither of the countries we are at war with actually attacked us. We simply decided to invade and occupy them.

If this is your definition of "going pretty well" then I would suggest you actually read the Constitution of these United States, and consider why our founding fathers were opposed to standing armies.

Why do you suppose your premiums keep going up? Certainly the State's regulations preventing interstate competition between insurance companies could have nothing to do with it. And the gigantic and byzantine colection set of rules, regulations and associated paperwork imposed by government regulations on every entity associated with healthcare? No way.

Close to 50 cents of every health care dollar goes through the government. How expensive do you suppose it will be when it's 100%? Oh that's right, it will be free then.

Nearly 50% of the national income is siphoned off by one government or another. The Federals borrow trillions from foreign countries and continuously debase the currency, thus robbing us all, via inflation. If you think they are doing all this for our benefit, rather than their own, then there's a P.T. Barnum quote that may apply to you. Don't feel bad though, it applies to nearly everyone who voted Democrat or Republican in the last election. They are all getting played.

To the extent we keep paying the income tax, we all are.

Posted by: Lucretius | Mar 19, 2010 7:23:04 PM

E-filing had been undermining the I.R.S's main role, which was to be a Federal make-work program on the order of Stalin's White Sea Canal. Obamacare would be just in time.

Posted by: Lou Gots | Mar 20, 2010 6:18:31 AM

1) The stupid policies that got us into pointless wars aside (policies promoted by the same people who now want to keep the status quo, I might add), everything I hear indicates our armed services perform admirably in all circumstances.

2) I suppose premiums keep going up because profits are also going up, as are lobbying costs to maintain the status quo.

3) Government regulation is the reason insurance companies routinely deny care, forcing the sick to fight for their lives against a bureaucracy that has NO interest in making people well? I'll see your "government regulation" and raise you thousands on thousands on tens of thousands of people who spend all day on the phone with the poor, overworked insurance companies, trying to get treatment. Behavior like that is WHY we have to have regulation! You think the insurance companies are some innocent victims of mean ol' bureaucrats? It's like you've never been sick or met a sick person!

4) Health care costs are the largest expense per employee, health care expenses are the leading cause of bankruptcy, and health care premiums just went up 40% in California.

5) Health care that is subsidized does get more expensive, because government subsidies to private companies are stupid. Which brings me back to that cheap, clean water... Have you seen how much private companies charge for a bottle of the same stuff you can get in the tap? Do you think maybe healthcare could end up as a similar system, where private, expensive care is available to those who want it, and public care keeps the public from having to spend all their time seeking clean water like we live in an undeveloped nation or losing productivity to easily prevented illness?

Posted by: Liz | Mar 20, 2010 7:18:57 PM

Paying for national health care will cost the government billions, but help is on the way. The best income producing arm of the government is the IRS, each dollar spent on the salary of one of its employees brings back thousands. The hiring of 16,500 new agents will pump billions into empty vaults. They will hunt down free riders who refuse to pay their dues. The new tax collectors will make sure that no cheater is left behind.

Posted by: melvin polatnick | Mar 21, 2010 9:08:32 AM

Lou - I have nothing but respect for our armed services. Members of my family have fought in every war since the Revolution. What I suggest is that they are being betrayed, as we all are, by a Federal government that acts outside the Constitution (and is therefore illegal) and against the wishes of, and the interests of, the people. Case in point, ObamaCare is disfavored by the majority of Americans, but it's a good bet we'll get it anyway. Another case in point - look up how many invaders have successfully subdued Afghanistan in the last 2000 years, or even in the last 200. The lives of our countrymen are being squandered for reasons other than our national security.

As for your points 2 and 3, the fundamental problem is that government regulation has inserted a middleman between the people providing, and the people receiving medical care. Among the primary reasons that medical care costs so much is that it's not the person receiving it that has to pay for it. Rather, it's some insurance company that does not know or care about either the heath care provider or the person he/she is seeing.

Medical care is like any other service. Imagine if the government were to issue a similar set of thousands of regulations, restrictions, requirements and mandates on auto mechanics, so that your employer was required to take money out of your paycheck every two weeks so that when you had a flat tire, you could go in and get it fixed without having to pay anything. Not only that, but that your neighbor, who makes less money than you do, can do the same at your expense?

How efficient do you think that would be? Do you think that the price of auto care would actually go down as a result? This is the system we have now.

Imagine a scenario where there was no government involvement in heath care: For routine visits people would pay out of pocket for what they needed, insuring that they only went to the doctor when they needed to, and only got what they needed. There would be nationwide competition among insurance providers to offer catastrophic and other insurance packages at low rates since the risk would be spread out among large numbers of people and they would not have monopolies within a given state, as they do now thanks to, you guessed it, government regulation.

Government regulation, and the inevitable redistribution of people's wealth that results (and the reason, by the way, for all that lobbying you mention), without exception results in inefficiency and higher costs. The best answer is always provided by freedom of choice and the free market, which go hand in hand.

To paraphrase PJ O'Rourke: "If you think health care is expensive now, wait until you see what it costs when it's free."

As for Liz' comment, you underestimate how much health care will cost by an order of magnitude, at least. It will cost trillions, not billions. Our government is already bankrupt. Where will this money come from?

Another question for you, Liz. What is the difference, really, between the IRS, which extracts money from you at gunpoint (try not paying your taxes for awhile and see who shows up at your door) and a common thief, who pulls out a gun on the street and demands the same amount of money?

As for all those "free riders" you mention, are you aware than more than 40% of the population pays no income tax? That some 25% actually get more money back than is withheld?

The IRS is just as much a welfare agency as a revenue agency. The bottom line is they engage in legalized theft of some people's money so that it can be given to other people who did not earn it.

Posted by: Lucretius | Mar 21, 2010 8:14:14 PM

Big government is BAD. More entitlements are BAD. We are sliding down the slippery path of Socialism. My U.S.A. is becoming more like the U.S.S.A. (Fill in the blanks)

Posted by: concerned | Mar 23, 2010 5:53:00 PM

It's pretty scary that the IRS is getting involved in healthcare. How could an IRS agent possibly understand all the nuances of health insurance. I guess the good news is, we can all get a job with the IRS. Pretty soon the only jobs in the US will be with the government.

Posted by: Ron Stone | Apr 13, 2010 9:35:42 AM

I agree with the comment above that it's scary how lines are blurring in the government. That some sectors are being given power and control they shouldn't have.

Posted by: Health Insurance | Apr 13, 2010 7:51:27 PM