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Health Law "Taxes" the IRS


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The highest court in the land issued a landmark decision just days before the United States celebrated its 236th anniversary declaring independence from a tax-happy monarchy. I respect the Supreme Court, but the colonial patriots who rallied against "taxation without representation" and blazed the trail for liberty, freedom and the pursuit of happiness must have rolled over in their graves on the eve of Independence Day 2012.

The 5-4 ruling upholding the 2010 health care law essentially gives Congress a license to use its taxing authority to regulate and direct the public in infinite scenarios as a means to an end. Writing for the majority, Chief Justice Roberts threaded a legal needle, massaging the federal law to solve a Constitutional conundrum.

As the Chief Justice wrote in his 59-page opinion, "…the requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax." Using this logic and Congress' track record for inflating the tax code, it is undoubtedly reasonable that the long arm of the law will be reaching deeper into the public's pocketbooks to steer and regulate citizens' behavior.

Notwithstanding the considerable issues of individual liberty, freedom of religion and free enterprise, the ruling triggers all kinds of administrative nightmares. By any measure, the Internal Revenue Service already has its hands full administering an exceedingly complex federal tax code.

The IRS handles over 145 million individual tax returns annually and its workforce is under increasing pressure to thwart identity theft, close the tax gap, and balance customer service with efforts to track down tax cheats.

The IRS has enough on its plate to properly and effectively carry out its primary mission: enforcement of the nation's revenue laws. That's why during Senate debate on the health care law I raised concerns about giving the IRS more responsibility than it could chew.

Just consider a recent report that reveals a surge in identity theft (450,000 cases) and high-dollar refundable credits fraud. The IRS faced unprecedented backlogs during the past tax season as the agency worked to keep up with the jump in fraudulent schemes. Its fraud detection system identified more than one million returns as potentially fraudulent.

As a member of the tax-writing Senate Finance Committee, I have worked to try to make the IRS an accountable tax collection agency. From championing taxpayer service to strengthening transparency through my advocacy of whistleblowers and the independent taxpayer advocate, I have worked through legislative and oversight channels to help the IRS better do its job for the honest taxpaying public. The big spenders in Washington tirelessly seek to increase the IRS budget, angling for billion dollar increases. The tiresome argument undoubtedly will be re-charged now that the IRS has been charged with administering a slew of new tax laws included in the 2010 health care law, including the individual health insurance mandate, the employer free-rider penalty, the premium subsidy for low-income individuals and the small business tax credits.

Consider the "unprecedented" backlog this tax season as just the tip of the iceberg. Imagine the dysfunction once the IRS starts to sort through millions of returns claiming refundable insurance premium tax credits, verifying income information for the new government insurance exchanges, calculating and collecting excise taxes and assessing the individual mandate tax.

Speaking from three decades of experience as a taxpayer watchdog, my crusade to root out waste, fraud and abuse tells me the IRS hasn't seen anything yet.

Assigning the administration of social welfare programs to IRS is misguided policy. Unless, of course, centralizing health care, growing new layers of government and putting federal bureaucrats in charge of one-fifth of the nation's economy are underlying goals of 2010 health care law. The partisan overhaul was an overreach that missed an opportunity to enact important reforms to the health care system that have broad-based support.

The IRS certainly has its work cut out to try and connect the dots and collect the mandate "tax," distribute premium subsidies, administer health insurance coverage and keep on top of its core mission of collecting taxes.

Voters who disagree with the Supreme Court's ruling need to take Justice Roberts' advice. He noted the nine justices on the court "possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation's elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices."

Justice Roberts essentially pitched the ball back to the court of public opinion for the electorate to decide in November if the Supreme Court hit a home run or struck out by upholding the health care law.

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