Re: US Politics II--return of the shouting
Not to derail the current conversation (please feel free to carry on with it), but I saw something in a letter to the editor the other day that has been bouncing around in my head and I wanted to see what you guys thought of it.
As you probably know, a judge a ruled against the Health Care law passed earlier this year, and everyone expect it to end up in the supreme court. The major objection that opponents of the law have is with the mandate to buy insurance. All this has been shouted about over and over, so nothing new yet. What got my attention the other day was someone suggesting the that problem with the law was mostly one of branding/marketing (and also of the details of implementation). Calling it a "mandate" to buy it comes off very differently then giving a tax break for buying it, even though the effects in each case are pretty much exactly the same. Technically, I think the mandate is actually set up as a tax that you can avoid if you buy insurance, rather than a fine if you don't, but it's been presented the other way around. The thing that really jumped out at me, though, was someone making the comparison with the income tax deduction for mortgages. Basically, if you've bought a house and are paying a mortgage, you get a very sizable deduction to your income tax. In fact, I've been told many times it's only really worthwhile to do itemized deductions if you've got a mortgage (which I can't really verify, because I don't have a mortgage, and thus have never done itemized deductions. Add to that the fact that I'm now living in the UK, and only have to pay US income tax if I make over something like $80 over here because of tax reciprocity between the US and UK, and you get the fact that I'm far from an expert on the mortgage deduction). Anyway, the question becomes this: Is the mortgage deduction an effective "mandate" to buy a house? Has the government overstepped its power by "forcing" me to entering into an agreement with a bank, and buy a home, going so far as to "fine" me if I don't?
It sounds a bit comically, and to a degree, it is, but at the end of the day, many people pay higher taxes because they don't have a mortgage. Call it a break for those who do have mortgages, or call it a fine on those who don't, the effect is the same either way. To my knowledge, there isn't a major movement pushing to have the mortgage deduction ruled unconstitutional. Is the difference between health care and home ownership largely one of how they've described the system? Would it have been less controversial if Obama and the dems had described it as a "tax break for people with health insurance" from the start, rather than a "mandate" to buy insurance?
There is a difference between the ways the two policies are implemented, which is probably worth pointing out. The mortgage deduction is applied to income tax, whereas the health care "fine" is a new tax introduced just for this purpose, and not directly related to income. Had the system been implemented such that you loose $5k of your deductions (or whatever the "fine" is) or something along those lines (well, it'd have to be slightly different because a $5k deduction doesn't lower your taxes by $5k, but hopefully you can see where I'm going with this), would there be less objection to it now? Those with lower incomes already get assistance in buying insurance in the health care law, so the fact that some people don't pay $5k (or whatever) in taxes presumably wouldn't break the system.
What do people think? Is there anything to this idea that the failure is mostly one of marketing/branding of the health care law? Is the mortgage deduction effectively a mandate forcing us to buy homes?