When is a Tax Not a Tax?
I happened to catch a segment on CNN about Obama’s health care plan. One of the many controversial parts of his proposal is that folks will be required to buy insurance. Naturally, some folks are labeling this a tax, most likely to score political points because Obama claimed that his plan would not increase taxes.
In part, this is a semantic debate over the meaning of “tax.” On one hand, it is not a tax in the usual sense. Obama uses the obvious analogy to the fact that most states require people to buy car insurance, yet that is not considered to be a tax. On the other hand, it could be seen as a type of tax in that the state is requiring people to spend money.
While the battle over the semantics is important for political points (so Obama can try to say he is not taxing and his opponents can try to say he is), what strikes me as the more important concern is that the state would be requiring people to buy a product and this, under any name, will cost folks more money than they spend now. This, of course, raises the important issue of whether this is a good idea or not.
On the one hand, it does seem to make sense. After all, the same sort of arguments that are used to justify requiring folks to be car insurance can be modified a bit and brought into play. When folks buy car insurance, part of it is to protect other folks when accidents occur. Likewise, if folks were forced to buy health insurance, one reason is that it would remove the expense from the rest of us when those folks get sick or hurt.
On the other hand, forcing people to buy health insurance is compelling them to spend money. While the state compels us to do things all the time, it is always reasonable to consider each new imposition carefully and to see whether the state has an adequate justification for this.