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Poor, Middle Class Hit by Obamacare Mandate Tax

With campaign season in full tilt, Americans are being inundated with rhetoric regarding the various tax proposals touted by President Obama and Governor Romney.

Given that these discussions usually involve paeans to the middle class and promises to keep their tax rates low, one tax in partcular has received surprisingly little attention: the “penalty” levied on all Americans who do not buy health insurance.

As shown in the chart above, this new tax – defined as such by the Supreme Court, which ruled it constitutional under Congress’s taxing power – hammers not just the middle class, but roughly 600,000 Americans whose incomes fall below the federal poverty line, according to a recent report from the Congressional Budget Office.

Heritage health care expert Alyene Senger explained the distribution of the tax in a recent Foundry post:

“Yesterday, the Congressional Budget Office (CBO) released a new report that determined that even more Americans than previously estimated will be hit with Obamacare’s ever-controversial individual mandate tax, totaling 6 million by 2016.

Of the 30 million Americans whom Obamacare leaves uninsured and without affordable insurance options, 6 million will have to pay the penalty, an increased estimate from 2010. According to CBO, “About two million more uninsured people are now projected to pay the penalty each year, and collections are now expected to be about $3 billion more per year.” The total cost to uninsured Americans will be around $7 billion in 2016 and is projected to be about $8 billion every year from 2017 to 2022.

The tax penalty is calculated in different ways depending on income levels. If they do not obtain Obamacare-mandated health insurance, households with lower incomes will pay a flat dollar amount each year, and those with higher incomes will pay a penalty equal to a percentage of their incomes.

Despite claims made by Obamacare’s advocates that the law will help middle- and low-income Americans, CBO’s table reveals that the distribution of the tax falls heavily on those making less than 400 percent of the federal poverty level (FPL)—meaning the majority of this new tax falls on the very people the law was supposed to help. For instance, a family of four making about $24,600 per year, the projected FPL in 2016, could be subject to this egregious tax penalty.

Regardless of whether or not these 6 million Americans want health coverage, they are going to pay a hefty tax and still won’t have it. Moreover, the individual mandate tax is only one of Obamacare’s 18 new or increased taxes and penalties that will cost Americans $836 billion over the next 10 years.”

The Heritage Foundation

October 8, 2012


  1. Cal October 15, 2012

    This article does not address the fact that those who cannot afford to pay for insurance will receive assistance from the government to do so. Yes, that will increase the need for more tax dollars, but if Obama’s plan is followed the tax dollars will be there.

  2. Jacque October 17, 2012

    Is there any information on what or how much that assistance will be? Who will be able to receive it? How will they determine if someone qualifies for the assistance?

  3. Judy November 7, 2012

    This is just one step to Socialism. He is out to destroy our country and everything we stand for. The Bible says they who curse Israel, I will curse them. We have just about thrown Israel to the wolves (Iran).

  4. FONTENOT November 7, 2012


  5. Pamela November 8, 2012

    I am so sick of hearing …The government will take care of it…..They cant even do their jobs….there is NO MONEY for them to take care of anything…..I am sick of having to pay more and more for sorry people who want something for NOTHING!

  6. Dhiru November 9, 2012

    If person do not want to buy Health Insurence or can not afford to buy what can happen if he or she get sick to death will have all neccessary treatment cover buy government and will pay penlty at end of year, It is very confusing.

  7. Edmund November 10, 2012

    What gets me is the fact that for those who cannot afford insurance, with or without government assistance, will be fined? If you do not have the monies to cover the basics (roof/food/clothes) how are they going to afford insurance? If they are forced to pay insurance will we not have more on welfare or public assistance of some sort? Washington did not think this one out. All they care about is their pockets. Why not let the wealthy pay their share of taxes based like we bottom feeders are paying?

  8. Edmund November 10, 2012

    I agree. I live in Brooklyn and the thing that gets me is those in the projects, and I do not mean all, who get their rent paid, food stamps and welfare while they are wearing designer clothes, wear more gold than God and Mr. T. and drive around in BMW’s, Jaguars, Navigators while we the working poor (formerly known as the middle class) are footing the bill. The government does not know how to handle money. Give me the job, I’ll show them how it is done.

  9. Allison November 11, 2012

    Dhiru, The people will just prpbably be left to die. Thats good for them so they do not have to pay you ssi either.

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