Tax penalties and prison

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By Donald Lambro

In all the sanitized TV news reports about the House-passed health care plan, no one mentions the shocking tax penalties and maybe jail time implicit in the bill's nearly 2,000 pages.

This is what could await uninsured Americans who do not want to buy health insurance as the bill demands them to do - or else.

Congress' Joint Committee on Taxation (JCT), in a letter to the House Ways and Means Committee, confirms that failure to comply with the terms of the law that the Democrats passed last weekend could put people in jail. The JCT told the committee that anyone who decides not to maintain "acceptable health insurance coverage" or, absent that, pay the individual health insurance mandate tax of about 2.5 percent of income, would be liable to large fines or prison sentences.

"This is the ultimate example of the Democrats' command-and-control style of governing - buy what we tell you or go to jail. It is outrageous and should be stopped immediately," said Michigan Rep. Dave Camp, ranking Republican on the tax-writing committee.

"H.R. 3962 provides that an individual (or a husband and wife in the case of a joint return) who does not, at anytime during the taxable year, maintain acceptable health insurance coverage for himself or herself and each of his or her qualifying children is subject to an additional tax," the JCT letter stated.

"Prosecution is authorized under the Code for a variety of offenses. Depending on the level of noncompliance, the following penalties could apply to an individual" under these circumstances if the government determines the taxpayer's unpaid tax liability results from willful behavior, the JCT explained. It gave two examples when these penalties could be applied under the U.S. tax Code:

c "Section 7203 - misdemeanor willful failure to pay is punishable by a fine of up to $25,000 and/or imprisonment of up to one year.

c Section 7201 - felony willful evasion is punishable by a fine of up to $250,000 and/or imprisonment of up to five years," the JCT letter said.

The Congressional Budget Office says the lowest-cost nongroup family plan under the House bill would cost $15,000 in 2016 - a hefty sum for millions of middle income, mostly younger Americans and families whose budgets are stretched as it is.

The Senate Finance Committee reduced the penalties for the failure to purchase health insurance, although noncompliance could still hit uninsured Americans with significant tax penalties. But that will lead to further financing problems because it creates an incentive for younger workers who would prefer paying the fine than costlier insurance premiums, shrinking the risk pool of healthier people needed to offset the costs of everyone else.