ACA/Obamacare: When the Taxing Authority Pays Its Own Imposed Tax. Huh? No Way! Way!

"President Obama's promise that Americans could keep their health insurance if they liked it was the most infamous of the Affordable Care Act's sketchy sales pitches. But many of the law's most damaging aspects are less known, buried in thousands of pages of regulations.

Consider the "fee"—really a hidden sales tax—that all health-insurance companies have been forced to pay since the first of this year on premiums for policies sold to individuals and small and medium-size businesses. The health-insurance tax—known as HIT in business circles—is expected to generate revenues of about $8 billion this year and as much as $14.3 billion by 2018, according to the legislation.

The Congressional Budget Office and the Joint Committee on Taxation predict that insurance companies will pass the cost on to customers, as any company subject to such a tax would. In other words, millions of Americans lucky enough to keep their current health insurance under ObamaCare will be paying much higher premiums because of this tax, with the added cost rippling through the economy and stifling job creation.

The National Federation of Independent Businesses projects the health-insurance tax will add an additional $475 per year for the average individually purchased family policy—nearly $5,000 over the course of a decade. Small businesses will take an even bigger hit, with the cost of an employer-provided family policy rising a projected $6,800 in the next decade." - ObamaCare's Hidden Hit On Businesses, WJS, 04/01/2014 (1)


The insurer indeed passes on the tax as part of total premium. The tax is then shown as revenue by the government as it taxes the insurer. The insurer has collected the tax as part of the total premium charged.

What if the government imposes the ACA/Obamacare tax, the insurer passes on the tax, then the government pays its own imposed tax? How so?

Many lower income married couples with children in the household, children that are already on Medicaid or CHIP, qualified for subsidies through ACA/Obamacare that were greater than or equal to the bronze or silver plan premiums. That is to say, the premium paid by these couples is zero dollars [full premium subsidy].

Hence the couple have zero premium payments and the subsidy (taxpayer dollars) pay the entire premium. However, the insurer still passes on the tax within the premium. The government then sends the insurer the premium subsidy which in this case is the total premium as the married couple pay zero dollars.

One ends this exercise as follows:

(1) the tax imposed by the taxing authority becomes part of total premium as the insurer passes through the tax,

(2) the insurer is then sent the subsidy, equivalent to the total premium, by the taxing authority,

(3) which means the tax is paid by the same authority imposing the tax.

If the tax imposed indeed represents $8 billion and as much as $14.3 billion by 2018, those estimates would need down-sized as a taxing authority imposing a tax, a tax that the same taxing authority simultaneously pays, can not be considered revenue. It might be considered foolishness, nitwitery or dupery, but it can not be considered “revenue”.


　
Notes:

(1) ObamaCare's Hidden Hit On Businesses, WJS, 04/01/2014

http://online.wsj.com/news/articles/SB10001424052702304418404579469412924624586?KEYWORDS=obamacare%27s+hidden+hit+on+business&mg=reno64-wsj