Monthly Archives: October 2013

The Democrats Mistake

The Democrats in congress made a huge mistake in drafting the Affordable Care Act. They called for a penalty for people who are not insured. Instead, they should have given a tax deduction to people who are insured. This way, nobody could say that the government is forcing me to buy health insurance. Today, we don’t have a groundswell of complaint about “the government is forcing me to buy a house”. That is because we get a tax deduction on mortgage interest that helps people buy homes. If instead, we had a penalty for people who don’t buy a house, there would be no end to the howling.
However, the net effect of having a tax deduction for those who do something and a penalty for those who don’t do something could be exactly the same.
Next time someone complains that people shouldn’t be forced to buy health insurance, ask them if they should be forced to buy a house. Then explain to them that the net effect of the penalty for not buying insurance is the same as if we had come up with a revenue neutral tax deduction for those who buy health insurance, and that there are multiple precedents for tax deductions.