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The Biggest Tax Increase in the World That Isn’t

Conservatives’ claim that “Obamacare” is the largest tax increase in history is entirely false, but that doesn’t seem to matter.

Ben Adler

July 2, 2012

No sooner had the Supreme Court upheld the constitutionality of the Affordable Care Act (ACA) than conservatives had invented a new falsehood—let’s call it the death panels of 2012—with which to smear it.

Since the law contains a penalty for free-riders who do not purchase health insurance, and since the Supreme Court upheld the ACA under the federal government’s taxing power, Republicans are determined to rebrand the entire law as a tax on all Americans.

Several Republican members of Congress and Congressional candidates started making bogus claims about the size of this supposed tax hike. Representative Connie Mack (R-FL), called it “the largest tax on the American people in history.” Conservative media, such as Fox News, instantly starting repeating this claim. Rush Limbaugh went even further, saying, “Obamacare is nothing more than the largest tax increase in the history of the world." 

By Friday the new falsehood was so well-established among Republicans that it could be cited by Republican strategists as an objective circumstance in a Washington Post article. “This ruling is the kiss of death for the Democrat majority in the U.S. Senate as health care just became a tax increase on the middle class in one of the worst economies Americans have ever faced,” Republican strategist Chris LaCivita was quoted as saying in the Post.

The claim that the ACA will impose a large tax, much less the largest in American history, is simply false. The tax it will impose is a penalty paid by those who do not have insurance and refuse to purchase it. Another way of describing it would be a user fee for emergency room care by those who refuse to pay their fair share for a healthcare system they will surely want to use if they are shot or hit by a car.

The law, of course, will assist the poor in affording health insurance. So in addition to the majority of Americans who are already covered, most will buy it. The nonpartisan Congressional Budget Office (CBO) estimates only 4 million Americans will face the penalty.

According to Politifact, a nonpartisan, Pulitzer Prize–winning fact-checking organization, “Limbaugh, GOP have it wrong: Health care law is not the largest tax increase ever.” Politifact ran the numbers, and here is what they found:

In 2019, the CBO estimates, the government will see increased revenues of $104 billion. We then divided that number into the projected GDP for 2019, which according to the CBO economic forecast is $21.164 trillion. That would mean the tax increase provisions of the health care law would amount to .49 percent of total GDP.

Depending on your rounding, that would mean the tax increases resulting from the health care law would be about the size of tax increases proposed and passed in 1980 by President Jimmy Carter, in 1990 by President George H.W. Bush and in 1993 by President Bill Clinton.

The health care-related tax increases are smaller than the tax increase signed into law by President Ronald Reagan in 1982 and a temporary tax signed into law in 1968 by President Lyndon B. Johnson. And they are significantly smaller than two tax increases passed during World War II and a tax increase passed in 1961.

The tax increases in the health care legislation do reverse a trend of federal tax cuts and represent the first significant tax increases since 1993.

But they are not the largest in the history of the United States.

And—despite what Limbaugh said—that means they cannot be the largest ever in the history of world. Limbaugh’s inflated rhetoric takes a wrong claim and puts it into the realm of the ridiculous. We rate it Pants on Fire.

Politifact actually debunked this lie a year ago when Governor Rick Scott (R-FL) made a similar claim. But mere objective reality has never concerned Limbaugh before, so there is no reason to expect it will now.

Ben AdlerTwitterBen Adler reports on Republican and conservative politics and media for The Nation as a Contributing Writer. He previously covered national politics and policy as national editor of Newsweek.com at Newsweek, a staff writer at Politico, a reporter-researcher at The New Republic,and editor of CampusProgress.org at the Center for American Progress. Ben also writes regularly about architecture, urban issues and domestic social policy.  Ben was the first urban leaders fellow, and later the first federal policy correspondent, at Next American City. He has been an online columnist, blogger and regular contributor for The American Prospect. He currently writes regularly for The Economist's Democracy in America blog, and MSNBC.com's Lean Forward.  His writing has also appeared in Architect, Architectural Record,The Atlantic,Columbia Journalism ReviewThe Daily Beast, DemocracyGood, GristThe GuardianIn These TimesNew YorkThe ProgressiveReutersSalon, The Washington Examiner and The Washington Monthly and has been reprinted in several books. Ben grew up in Brooklyn, NY and graduated from Wesleyan University. You can follow him on Twitter.


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