There are no easy answers in figuring out in advance exactly what taxes will apply to any given person, but Henry Blodget at Business Insider outlines what to expect in general terms:
- The penalty/tax will be phased in from 2014 to 2016.
- The minimum penalty/tax in 2016 will be $695 per person and up to 3-times that per family. After 2016, these amounts will increase at the rate of inflation.
- The minimum penalty/tax per person will start at $95 in 2014 (and then increase through 2016)
- No family will ever pay more than 3X the per-person penalty, regardless of how many people are in the family.
- The $695 per-person penalty is only for those who make between $9,500 and ~$37,000 per year. If you make less than ~$9.500, you’re exempt. If you make more than ~$37,000, your penalty is calculated by the following formula…
- The penalty is 2.5% of any household income above the level at which you are required to file a tax return. That level is currently $9,500 per person and $19,000 per couple. The penalty on any income above that is 2.5%. So the penalty can get expensive quickly if you make a lot of money.
- However, the penalty can never be more than the cost of a “Bronze” heath insurance plan purchased through one of the state “exchanges” that will be created as part of Obamacare. The CBO estimates that these policies will cost $4,500-$5,000 per person and $12,000-$12,500 per family in 2016, with the costs rising thereafter.
Update: In spite of all the agonized wailing from the Republicans (especially the Tea Party folks), Steve Chapman is determined to find the limited government silver lining in the Obamacare decision:
While it was upholding the mandate, the court was striking down an equally important part of the law: the requirement that states greatly expand Medicaid coverage, at a cost of about $1 trillion between 2014 and 2022. The administration sought to force states to go along by threatening to take away all their Medicaid funds — not just those provided for the expansion. But Roberts and Co. said no.
Does it matter? You bet. It’s the first time the court has ever said Washington went too far in the conditions it places on money sent to state governments. The ruling will give states more latitude to make their own decisions in all sorts of areas.
The case also registered a victory for the notion that judges should apply the Constitution in an impartial way rather than simply impose their policy preferences. George Washington University law professor Orin Kerr, writing on the conservative-libertarian blog The Volokh Conspiracy, said the overall decision was “a largely conservative opinion that just happens to get to a liberal result.”
Equally significant is that it took a worse health care option off the table. The irony of the challenge is that if Obamacare had been struck down, supporters of universal health coverage would have been left with no good option but a “single-payer” system, also known as “Medicare for all” — which is undoubtedly constitutional.
Whatever the flaws of Obamacare, it at least builds on the existing system of private insurance. Vermont’s self-proclaimed socialist senator, Bernie Sanders, used the court’s decision to renew his call for a single-payer system. But for him, the verdict was the worst thing that could have happened.
For anyone even slightly open to evidence, letting Obamacare take effect will provide an illuminating experiment in how to afford the miracles of the American medical system to more people, including many in dire need. It may be a failure, or it may be a success. But it will not be uninformative.
So… for a single person making $35,000, the choice is to pay a $60/month penalty, or pay $400/month for a bare-bones insurance policy.
Yeah, that should work just fine.
Comment by cirby — July 2, 2012 @ 10:21
Well, the alternative would be to just collect the money out of general tax revenues, and with the US economy in such a feeble state, jacking up tax rates right now would be terrible for … oh, right.
Uh, carry on citizen, nothing to see here. Move along.
Comment by Nicholas — July 2, 2012 @ 11:11