CaliforniaCare: The Employer Mandate on Steroids

employer mandate

California AB 880: “This bill would make it unlawful for a large employer to, among other things…reduce an employee’s hours or work…if the purpose is to avoid the imposition of the penalty. A violation of those provisions would result in a penalty of 200% of the penalty amount the employer would have paid for the applicable period of time.”

ObamaCare’s employer mandate is off to a disastrous start even before it kicks in.  The CBO has already scored the measure to cost employers $150 billion in draconian excise taxes over the next eleven years, and there’s no telling how much the compliance costs will total.  Most employers are in no position to shoulder this burden.  How have they responded?  For many, the only hope has been to reduce employees’ hours because the employer mandate and its associated penalty taxes apply only to employees who average at least 30 hours per week. Regal Entertainment Group recently announced that it would join the long line of mega-sized employers to be reluctantly forced down this road.

Tax Breaks Are Not Tax Expenditures


“Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.” — John Locke, Second Treatise of Government (1690)

What is “spending through the tax code?”  This is an important question in light of the Obama FY 2014 budget proposal finally unveiled last week.  We already know it raises taxes by more than $1 trillion.  Much of this is done by eliminating so-called “tax expenditures.”

Here is how the Joint Committee on Taxation defines a tax expenditure:

Tax expenditures are defined under the Congressional Budget and Impoundment Control Act of 1974 (the “Budget Act”) as “rev­enue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross in­come or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.”

ObamaCare’s “Family Glitch” Exposed

Obama signs ObamaCare

Let’s put aside for a minute that ObamaCare is unconstitutional, adds $6.2 trillion in debt, piles on countless new taxes, and has already racked up $31 billion and 71.5 million hours in regulatory compliance costs.  Yes, that’s a lot to put aside.  But for just a moment assume the role of a liberal with an entitlement mentality.  For a law with enormous riches and political capital invested in it, wouldn’t you expect it to at least function on its most basic level consistent with its namesake?  In other words, you would expect for the Affordable Care Act to provide affordable coverage.

The latest of ObamaCare’s fundamental flaws to be euphemistically reported as a “glitch” that needs to be “tweaked” is its failure to provide affordable family coverage for a broad group of employees.  As a result, Kaiser Family Foundation estimates that 3.9 million family dependents may not be able to afford employer-sponsored family coverage or receive subsidized coverage on an ObamaCare exchange.

Understanding the family glitch requires a quick primer on the byzantine regulatory structure governing Obamacare’s subsidies:

Tax Bite Leaves Flacco Second Best Paid in NFL

Written by Matt Blumenfeld, State Policy Associate at Americans for Tax Reform. Posted with permission from Americans for Tax Reform.

As reported this week, Super Bowl MVP Joe Flacco and the Baltimore Ravens have agreed to a six-year, $120.6 million contract making the star quarterback the highest-paid player in NFL history, earning an estimated $20.1 million per year. But being the “highest paid player” and earning the most after tax pay are two very different things.

By choosing to remain a Raven, Flacco is now set to pay a combined marginal income tax rate of 51.98 percent. This overwhelming tax rate is composed of the federal, Maryland, and Baltimore County income tax rate, as well as the Medicare tax. And that’s excluding his “jock tax” liability for away games – play the Patriots at Gillette Stadium, pay Massachusetts income tax on earnings for that game - and other taxes levied against him such as Maryland’s property tax.

Given that Flacco is coming off of his best season, the franchise quarterback could have commanded a similar contract from any other team in the league while keeping a greater percentage of his contract. Four of the nine no-income-tax states have professional teams in need of the Super Bowl MVP’s caliber and skill.



Federal Income

Tax Burden

State and County

Bob McDonnell’s Tax Hike Ends 2016 Bid Before It Starts

Bob McDonnell

Back in 2010, Virginia Gov. Bob McDonnell was thought to be the next big conservative star. After Barack Obama carried 6-point in there in 2008, many believed the Commonwealth was slipping away from Republicans. McDonnell, however, was able to restore hope for the GOP in 2009 when he defeated Creigh Deeds in the gubernatorial election.

McDonnell immediately became a key Republican spokesman. He gave the GOP’s response to the State of the Union address in 2010 and signed legislation — the Virginia Healthcare Freedom Act — that sought to nullify ObamaCare. Despite taking on President Obama in a purple state, McDonnell managed to maintain a 62% approval rating deep into 2011 and was one of the names most frequently mentioned to run alongside Mitt Romney in the 2012 election cycle.

There has been dissatisfaction with McDonnell from conservatives for some time, though much of this is related to how he has handled social issues. But McDonnell lit a flame under fiscal conservatives last month when he proposed an overhaul to Virginia’s transportation tax.

United Liberty Podcast: Rep. Tom McClintock (R-CA)

Tom McClintock

“Congress should be cutting spending, reducing the regulatory burdens that are crushing the economy — freedom works, and it is time we put it back to work.” — Rep. Tom McClintock (R-CA)

Just a couple of days after President Barack Obama laid out his agenda for the next year in his State of the Union address, I sat down with Rep. Tom McClintock, a Republican who represents California’s Fourth Congressional District, to get his thoughts on the proposals being pushed by the White House, the Senate’s refusal to pass a budget, ObamaCare, and a few other issues.

On the State of the Union, Rep. McClintock, who has been among the staunchest defenders of economic freedom and the Constitution in Congress, was dismissive of President Obama’s agenda. “[W]e heard this song before,” he noted. “I think that his words have to be measured against the last four years of his deeds.”

He rhetorically asked, “What have been his policies? Higher taxes, much higher spending, out of control deficits, crushing business regulations. And what have those policies produced? Family take home pay has declined over these past four years, the unemployment rate is higher than when we started — it would be much higher except for the millions of Americans who have given up even looking for work.”

“What did he propose? More of the same,” Rep. McClintock stated. “Taking bad policy and doubling down on it doesn’t make it good policy.”

The 100th Anniversary of the Income Tax…and the Lesson We Should Learn from that Mistake

Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

What’s the worst thing about Delaware?

No, not Joe Biden. He’s just a typical feckless politician and the butt of some good jokes.

Instead, the so-called First State is actually the Worst State because almost exactly 100 years ago, on February 3, 1913, Delaware made the personal income tax possible by ratifying the 16th Amendment.

Though, to be fair, I suppose the 35 states that already had ratified the Amendment were more despicable since they were even more anxious to enable this noxious levy.

But let’s not get bogged down in details. The purpose of this post is not to re-hash history, but to instead ask what lessons we can learn from the adoption of the income tax.

The most obvious lesson is that politicians can’t be trusted with additional powers. The first income tax had a top tax rate of just 7 percent and the entire tax code was 400 pages long. Now we have a top tax rate of 39.6 percent (even higher if you include additional levies for Medicare and Obamacare) and the tax code has become a 72,000-page monstrosity.

But the main lesson I want to discuss today is that giving politicians a new source of money inevitably leads to much higher spending.

Rocketing Towards the True Fiscal Cliff

You mad, bro?

Now that the “fiscal cliff” deal is law, we move on to the next acts in this kabuki theater we call Congress. The fiscal cliff deal locked in most of the Bush-era tax rates permanently, raised taxes on the highest earners, allowed the payroll tax to increase on all earners (a shock to many Democrats, who thought the re-coronation of the Obamessiah exempted them from more taxes). It once again kicked the can of spending excess, specifically entitlement spending, down the road. It supposedly reduces the huge annual deficits, yet will bring in only $620 billion over ten years (enough revenue in a decade to pay HALF of THIS year’s deficit). Since entitlement spending drives our growth in debt, the fiscal cliff deal did not avert a fiscal crisis; it simply delayed it and insured that it will be much worse when it hits.

The irony is that Obama’s fiscal cliff deal theoretically demands higher taxes for “fairness,” to get the rich to carry more of the burden. However, a recent Huffington Post article quotes Professor Emmanuel Saez of UC-Berkeley, who reveals that income inequality is actually higher under Obama than it was under Bush. Or, as the writer explains, “That means the rising tide has lifted fewer boats during the Obama years — and the ones it’s lifted have been mostly yachts.” In other words, his uber-rich friends hit the jackpot even as the poor and middle class he supposedly protects suffer more.

Despite hand-wringing and breathless proclamations of impending doom, Congress and Obama showed they were completely unserious about fixing the problem, voting on the “fiscal cliff” bill without having a clue what was in it. According to Congressman Ron Paul, the bill was voted on in the House just 22-hours after the text was made available, and the Senate voted on the 154-page bill just three minutes after it was presented.

Know Your Consumer-Driven Health Care: Health FSA

This is the first of three posts on the primary consumer-driven health care arrangements under the current Internal Revenue Code.

What is Consumer-Driven Health Care?

As with almost all political issues today, there are two factions in the health plan industry constantly in conflict over the best structure for covering the cost of health expenses.  On one side is the defined benefit-type philosophy.  Under this traditional approach, an individual or combination of employer/employee pays a relatively high premium to receive coverage for most health expenses that the participant might incur during the plan or policy year.  This style of coverage typically comes with negligible or non-existent cost-sharing requirements for the participant to access services (e.g., copays for doctor visits, coinsurance, deductibles).

Consumer-driven health care, on the other hand, generally attempts to reduce the cost of health coverage by empowering individuals to control their health expenses.  Under this defined contribution-type approach, an individual or employer/employee combination contributes to an account or arrangement that can be used to cover health expenses.  The individual therefore has an incentive to limit health expenses that does not exist under traditional health coverage.

In my opinion, the ideal consumer-driven health care vehicle should strive to achieve three main objectives:

Gerard Depardieu Goes John Galt

Written by Marian Tupy, a policy analyst, Center for the Global Liberty and Prosperity at the Cato Institute. Posted with permission from Cato @ Liberty.

Few Frenchmen are more recognizable at home and abroad than the movie star Gerard Depardieu. Last week, Depardieu caused a great controversy in his native land by moving to Belgium – partly to avoid the 75 percent income tax on the wealthy that was introduced by the socialist President of France, Francois Hollande. Depardieu’s move was condemned by the French political establishment, including the Prime Minister Jean-Marc Ayrault who called the actor’s action “pathetic.”

Depardieu shot back and, in an open letter to Monsieur Ayrault, wrote, “I’m leaving because you think success, creation, talent and anything different should be punished. I am sending you back my passport and social security, which I have never used.” The French actor claims to have “paid 85 percent taxes on his revenues this year [2012] and estimated that he had paid €145m ($189m) in total since he started work as a printer at the age of 14.”

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