It’s that time again! As I do once every year, I’m turning over the blog to my readers for the last week in August. This year, readers had the opportunity to answer one of three tax-related questions; each of the questions is related to pending legislation or active issues in Congress.
I received a number of great responses. In order to have a balanced mix of posts, I have read through all of the submissions that have chosen those that represent a mix of viewpoints on each of the three issues.
Our next guest post was submitted by Scott Lovingood:
Will allowing the health care act to remain in place as written benefit or harm you as a taxpayer?
The Affordable Care Act often referred to as Obamacare is going to have a significant impact on our economy and our country. When it was passed many had not even read the full bill so it is hard to really call this the law of unintended consequences. Painfully as we will never truly know the intended consequences of this bill.
Conspiracy theorists say it is President Obama’s attempt to destabilize the country and bring about your favorite ism (socialism, communism, etc). Supporters say it was to bring stability to the health care system run amok.
Once a law is passed the intentions become less important than the reality. So what is the reality that this will have on me as a taxpayer?
Three major impacts of this law will spread like wildfire once it is fully implemented. Some of it is already being seen.
1) Higher costs – Not just in healthcare insurance but in many areas. The reason insurance premiums will jump is due to many young healthy people simply choosing to pay the penalty (tax by another name). This will skew the economics of the insurance companies who will be forced to increase pricing across the board. Employers that end up getting hit with fines will be forced to pass those costs along to consumers or to lay off employees so they don’t fall into the requirements. Don’t think it will happen? Better start studying economics. Some companies will benefit from this (probably mine) as they charge to help people work through the labyrinth of paperwork
2) Bankruptcy – Not me personally but many small business owners who are going be to hit with the penalties will eventually push them into it. That may sound like fear mongering but the truth is this tax will have severe repercussions to people who are on the edge with their business. Most small business owners are already struggling with the prolonged economic slowdown. Tossing this act on top of it is like tossing a concrete block to a drowning swimmer. Not the best idea.
3) Fraud – History shows that anytime money is involved fraud will follow. It works like gravity. Every time. This act creates the greatest incentive for tax filing fraud and identity theft we have ever seen. The IRS has struggled with keeping a handle on Earned Income Credit fraud for years. Identity theft has been escalating dramatically in the past couple of years. This act with the credits it creates is like throwing gas on a smoldering fire. It will explode in everyone’s faces. Systems will need to be created to combat it causing costs to soar.
This bill may have been started with good intentions. I have no way to reading the minds of the people who wrote it and passed it. But we all know which road is paved with good intentions…
Not sure we want to continue to be on it. The ripple effect of this act will continue far broader than anyone who voted for it can imagine.
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Thanks Scott! Scott Lovingood is a business coach and owner of a tax preparation company.
