Tag: pruitt v. sebelius

Gerson: ‘The Other IRS Scandal’

The Washington Post’s Michael Gerson writes that the IRS’s suppression of tea-party groups and the subsequent cover-up are the second-largest scandal haunting the agency.

Drawing from my article (with Jonathan Adler) on the illegal IRS rule meant to save Obamacare, Gerson concludes:

The IRS seized the authority to spend about $800 billion over 10 years on benefits that were not authorized by Congress. And the current IRS scandal puts this decision in a new light…

The whole enterprise [of Obamacare] is precariously perched atop a flimsy bureaucratic excuse. And the agency providing that excuse is a discredited mess.

When the IRS suppresses speech by the president’s political opponents, that’s nothing to sneeze at. Neither is it anything to sneeze at when the IRS tries to spend almost a trillion dollars against the express wishes of Congress.

IRS Chief, Who Defended Illegal ‘ObamaCare’ Taxes, also Denied Targeting of Tea-Party Groups

In 2011, members of Congress began criticizing a proposed IRS rule implementing ObamaCare’s health insurance tax credits. They claimed that the proposed rule violated the clear language of the Patient Protection and Affordable Care Act, as well as congressional intent, by issuing those tax credits in states that declined to establish a health insurance “exchange.” In effect, they claimed the proposed rule would result in the federal government taxing, borrowing, and spending hundreds of billions of dollars without congressional authorization. 

At the time, then–IRS commissioner Douglas Shulman leapt to his agency’s defense. He wrote that various provisions of the statute “support” the rule. He wrote that the “relevant” legislative history doesn’t show that Congress didn’t want the IRS to tax, borrow, and spend those hundreds of billions of dollars. He wrote that the proposed rule is “consistent with the language, purpose, and structure” of the law. The only thing he didn’t do was cite a provision of the law authorizing the rule, or even creating any ambiguity about the rule’s illegality.

The IRS finalized that illegal rule in May 2012. You can read all about it in my article with Jonathan Adler, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

It is worth noting that Shulman also leapt to the IRS’s defense against another charge that the agency was abusing its power. In 2012, conservative groups complained that the IRS was targeting them for audits. Shulman issued a forceful and categorical denial:

IRS Commissioner Douglas Shulman told Congress in March 2012 that the IRS was not targeting groups based on their political views.

“There’s absolutely no targeting. This is the kind of back and forth that happens to people” who apply for tax-exempt status, Shulman told a House Ways and Means subcommittee.

Shulman was wrong. Today, the IRS admitted it has been targeting conservative groups for audits

Perhaps some Friday afternoon hence we will be treated to an IRS admission that their tax-credit rule violates the Administrative Procedures Act and the PPACA, as two lawsuits now allege. I won’t hold my breath.

Strange Things Are Afoot at the Circle K

The Washington Free Beacon reports:

Circle K Southeast joined a growing list of national companies shifting workers to part-time status this week, in order to avoid paying Obamacare’s mandatory benefits, CBS-WTOC reports.

The alternative is to pay a $2,000 fine per fulltime worker who is not covered, leading Circle K to become the latest in a long line of companies to slice employee hours to avoid increased costs.

Here’s the video:

More Questions for Secretary Sebelius

Given the growing concern even among Democrats that ObamaCare will result in a “huge train wreck” later this year, I have a few questions for Health and Human Services Secretary Kathleen Sebelius to add to my previous list:

  1. What happens if a federal court (say, the Eastern District of Oklahoma) issues an injunction barring HHS from making “advance payments of tax credits” in the 33 states with federal Exchanges?
  2. Has HHS done any planning for that contingency? If so, what are those contingency plans?
  3. If HHS has not, why not? Given that the Congressional Research Service and Harvard Law Review both say there’s a credible case that the PPACA forbids tax credits in the 33 states with federal Exchanges, how could HHS not have a contingency plan ready?

For more on how HHS is violating federal law by planning to issue advance payments of tax credits through federal Exchanges, read my Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Care Law,” and my Health Matrix article (with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.

Reason.com: ‘6 Reasons Why States Should Continue to Oppose ObamaCare’

Drawing from my white paper “50 Vetoes: How States Can Stop the Obama Health Law,” Reason’s Peter Suderman highlights six reasons why states should refuse to implement any part of ObamaCare. Here are two:

3. Refusing to create an exchange potentially protects a state’s businesses from the law’s employer mandate.Obamacare fines any business with 50 or more employees that does not offer health coverage of sufficient value—as determined by the federal government—$2,000 per employee (exempting the first 30 workers).  The employer penalties, however, are triggered by the existence of the law’s subsidies for private health insurance. And as Cannon notes, the text of Obamacare specifically states that those subsidies are only available in states that choose to create their own exchanges. The IRS has issued a rule allowing for subsidies in states that reject the exchanges, but a lawsuit is already under way to challenge it. 

4. States also have the power to protect as many as 12 million people from the law’s individual mandate—the “tax” it charges individuals for not carrying health insurance. Obamacare requires that nearly everyone maintain health coverage or pay a penalty—a “tax,” according to the Supreme Court’s decision upholding the law last year. But Obamacare also exempts individuals who would have to pay more than 8 percent of their household income for their share of their health insurance premiums. So if states bow out of the exchanges, and as a result the law’s private insurance subsidies are no longer available, then the mandate will no longer apply to the low and middle income individuals who would have to pay more than 8 percent of their income to get health insurance. Cannon estimates that if all 50 states were to decline to create exchanges, a little more than 12 million low and middle-income individuals would be exempt from the law’s mandate.

Politico Has Been Reading My Email

From today’s Politico Pulse:

OBAMACARE LAWSUIT RECRUITMENT 101: START WITH THE INTERNS - Cato Institute’s libertarian mastermind Michael Cannon appealed to former interns of the right-leaning group to join an “exciting” legal challenge to Obamacare. Cannon is among the top proponents of a legal theory that suggests the health law forbids federal subsidies to people accessing insurance through a federally run insurance exchange.

—”To see if you might qualify, have a look at this checklist,” Cannon writes in a “Dear former Cato Intern” letter. “There are income criteria, plus you must live in one of 33 states, prefer to purchase no health insurance (or low-cost catastrophic insurance), et cetera. If you believe you meet the criteria for at least one of the three categories, email me … to learn more about how you can get involved in this exciting legal challenge, and jump on this chance to make history. Feel free to forward this email to others who may be interested.” The checklist: http://bit.ly/12lJ8Yb.

Thanks, guys. Might as well tell everybody, now. (And “right-leaning”? Seriously?)

Issa: IRS Is Violating ObamaCare by Illegally Taxing Employers in 33 States

House Committee on Oversight and Government Reform chairman Darrell Issa (R-CA) writes in the Washington Examiner

To combat the sticker shock of Obamacare’s numerous requirements on health insurance premiums, the law creates expensive subsidies, which take the form of tax credits, for individuals who purchase a government-approved insurance plan. In order to avoid the appearance of a federal takeover of health care, the law ties the availability of these premium tax credits to an “Exchange established by the State.” Importantly, the way the law was written, if tax credits are not available within a state, then the expensive employer mandate tax does not apply to companies within that state.

With so many states refusing to play the role the law’s drafters envisioned, the Obama administration has embarked on a legally dubious effort to bypass the plain language of the law. Obama’s IRS has issued a rule that delivers the expensive subsidies through federally run exchanges as well. If it stands, this extralegal rule will undermine the decision-making role offered to states by Obamacare, and cause hundreds of billions of dollars of taxes and spending not authorized by the president’s health care law…

The language that limits tax credits to state-established exchanges should not now shock Obamacare’s supporters. Early in 2009, legal scholar Timothy Jost, one of Obamacare’s leading proponents, explicitly suggested linking the tax credits to state-established exchanges as a way to encourage states to set up the exchanges.

The Obama administration may be surprised and disappointed that many states have not found the refundable tax credit to be a sufficient incentive to set up their own exchanges, exposing their citizens to the other taxes and penalties associated with the law. But this does not justify the administration’s effort to ignore the plain language of the law that Obama championed and signed.

For more on this issue, see Jonathan Adler’s and my Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”