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Issue Analysis

    Every Legislator Must Oppose the IRS Power Grab

    09/26/2012

    The Obama Administration is trying to raise taxes without Congressional approval, and they really don't care what you think about it.  Every legislator, whether state or federal, must oppose the usurpation of legislative prerogative. Citizens should oppose the move, which will raise their taxes without even a vote in Congress.

    At National Review Online,  Michael Cannon and Jonathan Adler write:

    A president who says “I haven’t raised taxes” has authorized his Internal Revenue Service issue a “final rule” that will illegally tax some 12 million individuals, plus large employers, in as many as 40 states beginning in 2014. Oklahoma’s attorney general has asked a federal court to block this rule. Members of Congress have introduced legislation in both the House and the Senate to quash it.

    As part of the PPACA, states are supposed to set up "exchanges". An exchange is a mechanism for selling insurance, typically with a web-based front end and swarms of bureaucrats and computers on the back end. There is considerable expense and effort required to set one up that complies with various laws and associated regulations.

    States can set up their own, or the federal government will set one of for them.

    But the PPACA says that federal subsidies will only be available in states that set up their own exchanges. The legislative history is clear: Congress intended that provision as an inducement for a state to set up its own exchange.  Incapable for Constitutional reasons of simply telling states they must create exchanges, Congress created what it thought were incentives, tax credits for citizens of states that create exchanges. 

    Repeal advocates set upon a strategy of not implementing state-based exchanges. A number of good things should happen when states refuse to implement the exchange on their own. In the worst case, repeal opponents should have to reopen the law, giving repeal advocates the opportunity to make substantial changes to it.

    But as David Catron wrote in July,

    There is, however, one weakness inherent in this strategy. It assumes that the Obama administration will obey the law. The plan will be difficult to implement if the President and his accomplices simply ignore the text of PPACA and illegally funnel tax credits and subsidies through federally-created exchanges. The past three years have certainly provided plenty of evidence that these people would not reject this course of action merely because it violates the law. It should, therefore, come as no surprise that it is precisely what they have decided to do. The IRS recently finalized a regulation that makes clear the administration's intention to provide premium assistance through federal as well as state-based exchanges.

    Cannon and Adler again:

    It is here that the IRS has gone rogue. The agency has announced that, despite the clear statutory language restricting tax credits to exchanges established by states, it will issue tax credits through federal exchanges. One can see why Oklahoma and the rest might be upset: By offering tax credits in states that opt not to create exchanges, the IRS is imposing taxes where Congress did not authorize them. This IRS rule will tax those 12 million low- and middle-income Americans, including 250,000 Oklahomans, contrary to the express language of the PPACA.

    The IRS power grab is a beyond cynical. It's a declaration by the Obama Administration that they do not care what the law is, they will do what they want.

    Every legislator at every level should be asked whether they support full repeal or not, and whether they support a job-killing state-based exchange.

    2 comments
    albert jo
    02/28/2013

    Incapable for Constitutional reasons of simply telling states they must create exchanges,<a href="http://www.100cookinggames.com">free cooking games</a>

    maria mark
    03/01/2013

    How far can Obama be successful in raising tax without the approval of the congress? I do not think such a thing will ever work out. Is there anyone else who feel the same way?And has there really been a declaration by the Obama administration that they do not care about the law?<a href="http://www.howtowindows.com">howtowindows.com</a>

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