Obamacare, Taxes, and Jobs
From Bloomberg this afternoon comes an article regarding Obamacare’s first tax increase – the tax on tanning services. A new report issued by the Treasury’s Inspector General for Tax Administration found that the tax brought in fewer than $37 million in revenue in the first half of fiscal year 2011 – far below the $200 million the Joint Tax Committee estimated the tax would generate in fiscal 2011. And the number of firms reporting the tax stood at only about 10,000 – well below the up to 25,000 firms originally estimated.
The Treasury IG faults delays and problems with implementation: IRS “should have done more to inform taxpayers of their filing responsibilities,” he said. (Perhaps the IRS was too busy sending out millions of postcards promoting Obamacare’s convoluted and ineffective small business tax credit to bother to inform many of these same small businesses about the new tanning tax.) The bureaucratic delays and confusion does nothing to bolster confidence in the IRS’ ability to implement an insurance subsidy program for tens of millions of Americans beginning in under three years’ time.
Of course, there’s another possible explanation for the lower-than-projected revenue showing, one that many Democrats might not bother to consider: If you tax something, you get less of it – less consumption, less firms selling the taxed goods, possibly even less firms altogether. Some firms that engaged in tanning services on the side might have decided to forego the revenue due to all the bureaucratic hassles the new tax would create. Some firms may have closed entirely. And all that, of course, means fewer jobs as well.
No matter the cause, the fact that this particular tax is not raising anything like the amount of revenue estimated is another reason why the claims the law will reduce the deficit are off-base – and yet another reason why Obamacare isn’t working for Americans, or the American economy.