Archive for July 3rd, 2012

July 3, 2012

Knox vs. SEIU – A Reaffirmation

The Supreme Court reached the right decision in the Knox case, but we still to need to let all American workers choose whether or not they want to belong to a union.    

Larry Sand President California Teachers Empowerment Network

While last week’s Supreme Court’s Arizona immigration and Obamacare decisions have caused great controversy in some circles, its earlier judgment in the Knox vs. Service Employees International Union case was widely heralded; only the union elites and their fellow travelers were unhappy with it. A great majority agreed that the Court acted properly in issuing a verdict that supported the freedom of union workers not to have to have dues forcibly removed from their paychecks and given to political causes that they don’t support. By a 7-2 margin, the justices said the SEIU could not force its members to pay the part of union dues that goes for political causes even if the union felt it was for the workers own good.

Actually this decision didn’t break any new ground. Unions haven’t been allowed to force workers to pay for their political agenda since the 1970s and 1980s when several landmark decisions were handed down by the court. But SEIU Local 1,000 in California tried to hoodwink the rank and file. The case probably never should have reached the high court, but their involvement became necessary in order to overturn a decision from the far left Ninth Circuit Court of Appeals (or as it’s affectionately known to us left coasters – the Ninth Circus), which has become a regular occurrence these days.

According to the Wall Street Journal,

The California SEIU local attempted to end run these protections in a special 2005 election and the midterms in 2006, amid a furious debate about union government perks. The SEIU joined a “Political Fight-Back Fund” to defeat two propositions that would have given then-Governor Arnold Schwarzenegger the ability in some cases to modify salaries, benefits and pensions. To fund this advocacy, the SEIU imposed a temporary 25% hike in union dues, never providing its 28,000 non-union members the Hudson notice that would have let them opt out.

The SEIU argued that lobbying against the ballot initiatives was really work on behalf of all workers. Yet that would erase the legal distinction between politics and collective bargaining. These activities may be especially fungible in public employee practice already, but this was too much even for liberal Justices Sonia Sotomayor and Ruth Bader Ginsburg, who concurred with the majority on the narrow if obvious grounds of technical precedent.

The irony here is dazzling. Steve Greenhut notes,

It’s ironic that SEIU took money from nonmembers to specifically battle a statewide proposition that would have stopped them from being able to take such money in the future. There’s something disturbingly totalitarian about that – making me give you money that you can use to stop me from exerting my rights.

The SCOTUS even went so far as to question whether or not an “opt in” method of dues collection would be more just.

Writing for a five-member majority, however, Justice Samuel Alito raises larger questions about compulsory union dues and individual rights. Shouldn’t the people who choose not to join a union, he asks, have to opt into political and ideological activities that they may presumably dispute—rather than opt out? “Which side should bear the risk?” he continues. “The answer is obvious: the side whose constitutional rights are not at stake.”

While the court is to be commended for its decision and bringing up the notion that opt out as the default position is grossly unfair, there is a bigger worker freedom issue at stake – that is, paying union dues as a condition of employment for certain workers in 27 states and the nation’s capital.

In California, for example, in order to teach in a public school, teachers are forced to pay dues to three different unions to the tune of over $1,000 a year. They must fork over money to a national union (National Education Association or American Federation of Teachers), a state affiliate (California Teachers Association or California Federation of Teachers), as well as their local union. If they choose not to have any part of their dues go to union supported political issues or candidates, they must resign from the union, and by November 15th of each year ask for a refund. They can expect to get back about a third of their dues. The bad news is that the union still gets to keep the rest, claiming that this is a “fair share” because they are representing teachers – whether or not this representation is wanted. And of course, union members usually have to find the resignation procedure out for themselves; the unions only grudgingly, upon request, give its members minimal information – and fairly often the information they do provide is misleading or erroneous.

Anyone who believes in liberty should be outraged about forced unionism. As a teacher, I was aghast at just about everything that CTA stood for, yet was still forced to line its pockets. The only way to pay nothing to the union as a teacher is to become a religious objector. This entails hiring a lawyer and proving that you are “religious enough.” If successful, the teacher still has to pay the full dues amount to a mutually agreed upon charity. Bottom line: In a non-right-to-work state, a teacher must pay to play.

With Independence Day upon us, we the people need to confront the fact that it is downright un-American and immoral to force workers to join an organization that they don’t want to belong to as a condition of employment. Anything short of giving workers the freedom to choose is not acceptable.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues.

July 3, 2012

Full List of Obamacare Tax Hikes: Listed in order of effective date

–Obamacare law contains 20 new or higher taxes on American families and small businesses–

WASHINGTON, DC – Obamacare contains 20 new or higher taxes on American families and small businesses. Arranged by their respective effective dates, below is the total list of all $500 billion-plus in tax hikes (over the next ten years) in Obamacare, where to find them in the bill, and how much your taxes are scheduled to go up as of today:

Taxes that took effect in 2010:

1. Excise Tax on Charitable Hospitals (Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS. Bill: PPACA; Page: 1,961-1,971

2. Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113

3. “Black liquor” tax hike (Tax hike of $23.6 billion). This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105

4. Tax on Innovator Drug Companies ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980

5. Blue Cross/Blue Shield Tax Hike ($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004

6. Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399

7. Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase nonprescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959

8. HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other taxadvantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959

Tax that took effect in 2012

9. Employer Reporting of Insurance on W-2 (Min$/Jan 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957

Taxes that take effect in 2013

10. Surtax on Investment Income ($123 billion/Jan. 2013):  Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income: Bill: Reconciliation Act; Page: 87-93

Capital Gains     Dividends         Other*
2012             15%                  15%                   35%
2013+           23.8%             43.4%               43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8% surtax does not apply to non-resident aliens.

11. Hike in Medicare Payroll Tax ($86.8 bil/Jan 2013): Current law and changes:

First $200,000 ($250,000 Married) Employer/Employee      All Remaining Wages Employer/Employee

Current Law 1.45%/1.45% 2.9% self-employed 1.45%/1.45% 2.9% self-employed

Obamacare Tax Hike 1.45%/1.45% 2.9% self-employed 1.45%/2.35% 3.8% self-employed

Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93

12. Tax on Medical Device Manufacturers ($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

13. Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI ($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provisionimposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995

14. Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389

15. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D ($4.5 bil/Jan 2013) Bill: PPACA; Page: 1,99416. $500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 bil/Jan 2013). Bill: PPACA; Page: 1,995-2,000

Taxes that take effect in 2014

17. Individual Mandate Excise Tax (Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following

1 Adult                           2 Adults                         3+ Adults
2014                     1% AGI/$95                   1% AGI/$190                1% AGI/$285
2015                     2% AGI/$325                2% AGI/$650                2% AGI/$975
2016               +2.5% AGI/$695             2.5% AGI/$1390           2.5% AGI/$2085

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337

18. Employer Mandate Tax (Jan 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

Combined score of individual and employer mandate tax penalty: $65 billion/10 years

19. Tax on Health Insurers ($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year.  Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993

Taxes that take effect in 2018

20. Excise Tax on Comprehensive Health Insurance Plans ($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956

Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases.  For more information or to arrange an interview please contact John Kartch at (202) 785-0266 or by email at jkartch@atr.org.

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July 3, 2012

The Breathtaking Lawlessness Of Chief Justice Roberts’ ObamaCare Decision

This is from the ObamaCare SCOTUS syllabus (pdf) which technically isn’t part of the opinion but a summation of the holdings that the justices approve before it’s included in decision.

1. CHIEF JUSTICE ROBERTS delivered the opinion of the Court with respect to Part II, concluding that the Anti-Injunction Act does not bar this suit.  The Anti-Injunction Act provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person,” 26 U. S. C. §7421(a), so that those subject to a tax must first pay it and then sue for a refund. The present challenge seeks to restrain the collection of the shared responsibility payment from those who do not comply with the individual mandate. But Congress did not intend the payment to be treated as a “tax” for purposes of the Anti-Injunction Act. The Affordable Care Act describes the payment as a “penalty,” not a “tax.” That label cannot control whether the payment is a tax for purposes of the Constitution, but it does determine the application of the Anti-Injunction Act. The Anti-Injunction Act therefore does not bar this suit. Pp. 11–

15.

3. CHIEF JUSTICE ROBERTS concluded in Part III–B that the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable.

The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power.It is therefore necessary to turn to the Government’s alternative argument: that the mandate may be upheld as within Congress’s power to “lay and collect Taxes.” Art. I, §8, cl. 1. In pressing its taxing power argument, the Government asks the Court to view the mandate as imposing a tax on those who do not buy that product. Because “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality,” Hooper v. California, 155

U. S. 648, 657, the question is whether it is “fairly possible” to interpret the mandate as imposing such a tax, Crowell v. Benson, 285

U. S. 22, 62. Pp. 31–32.

Got that? In Part II of the decision, it’s not a tax so the case can go forward but by Part II, it’s magically OK under the taxing power.

I guess the Taxing Power is so awesome it empowers things that aren’t taxes.

via The Breathtaking Lawlessness Of Chief Justice Roberts’ ObamaCare Decision « DrewMusings.

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