The Internal Revenue Service (IRS) announced that 6.5 million American taxpayers paid $3 billion in Obamacare penalties in 2016 because they were not covered by health insurance.
Even though President Donald Trump signed an order so that taxpayers do not have to indicate whether or not they have health insurance while filling out their taxes this year, the signature healthcare program pushed and implemented by former President Barack Obama has already siphoned billions of dollars out of taxpayers’ pockets in recent years – some of whom could not afford health coverage, and some of whom simply chose to pay the penalty instead.
Penalizing the poor
The astronomical amount Americans were forced to pay to the government in 2014 and 2016 were published in the form of a letter published by the commissioner of the IRS.
“For 2014, 8.1 million taxpayers paid [a] total of $1.7 billion in penalties; in 2016, 6.5 million taxpayers paid a total of $3 billion in penalties,” the preliminary data prepared by IRS Commissioner John Koskinen revealed. “The average 2016 penalty paid was around $470 – 70 percent of payments were $500 or less, and 7 percent of payments were $100 or less.”
The above figures indicate that even though the number of Americans who paid the penalty decreased by about 20 percent from 2014 to 2016, the overall amount of penalties that they paid nearly doubled over that time.
“For example, in 2014, those without insurance had to pay a flat fee of $95 – or 1 percent of the household's adjusted gross income in excess of the threshold for mandatory tax filing,” Newsmax reported. “In 2016, those penalties soared to a flat fee of $695 or 2.5 percent of the adjusted gross income.”
Argued by many Republicans and other conservatives to be unconstitutional, the individual mandate of the Affordable Care Act (ACA) has forced Americans to purchase healthcare coverage – even though they do not want it – or pay a penalty to the IRS.
However, a much larger percentage of Americans in 2016 abided by the Obamacare mandate and bought insurance. Also, about twice the number of those who did not have insurance (and paid the penalty) actually claimed exemptions from the fine.
“There were 117 million tax returns of individuals who had qualifying health care coverage all year, and 12.7 million taxpayers claimed an exemption to get out of paying the mandate,” the Washington Free Beacon noted.
Of all the exemptions offered, the IRS indicated that the most widely used one was utilized by households that did not earn enough to meet the tax-filing threshold posted by the government agency.
But not all Americans with low incomes fall under the IRS’s threshold – which amounts to punishing the poor.
“Obamacare has reduced the number of uninsured – the predictable outcome of mandating insurance coverage by law – while cruelly penalizing people financially who could not afford health insurance before, are rarely more able to afford now, and often find it more costly,” TheResurgent.com reported.
Fortunately for many taxpayers who do not desire or cannot afford health insurance, Trump made it a priority on his first day in office to make sure that Americans filing taxes this year do not have to disclose to the IRS if they did or did not purchase health insurance last year.
“This year, the IRS is easing requirements for Obamacare's individual mandate, after President Donald Trump signed an executive order requiring that federal agencies reduce the burden of Obamacare,” the Free Beacon’s Ali Meyer informed. “Now, the IRS will not require taxpayers to indicate whether or not they have health insurance.”
However, it is contended that allowing taxpayers to not report their health insurance status on their tax returns amounts to little relief.
“While the step may be seem to be a weakening of the ACA’s mandate, the IRS makes clear that the law is still in force,” Bloomberg BNA recounted, according to TheResurgent.com.
This reminder was issued by the IRS.
“[T]axpayers remain required to follow the law and pay what they may owe,” Koskinen insisted in his letter.
His line of reasoning was expressed earlier, when he emphasized that those not buying health insurance were engaging in unlawful activity.
“IRS Commissioner John Koskinen has previously said [that] despite the flurry of activity on the Hill regarding the ACA, taxpayers should follow current law until there is a new one,” TheResurgent.com's J. Cal Davenport pointed out.
It is argued that regardless of what option Americans choose concerning their healthcare, they should be prepared to pay out more money.
“To what extent the order changes the revenue and coverage outcomes of the law will not be known for another year, but doubtless, it will not in itself change the trajectory of the Affordable Care Act in continuing to force families to make decisions about which rising costs they will incur,” Davenport concluded, who left readers with the following lyrics from the famous song from The Beetles – "Taxman" …
If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet
‘Cause I’m the taxman, yeah, I’m the taxman
— The Beatles