If there was any question whatsoever as to whether California has gone completely off the rails, proposals in the new state budget should remove all doubt. Perhaps the most egregious of these involve changes in state law as they relate to health care.
As of this writing, those proposals have yet to be adopted by both houses of the legislature – which is constitutionally required to pass the budget bill by June 15th every year – but statements by legislative leaders have caused a great deal of angst among the taxpayer public.
First among the inexplicable ideas is the proposal to force citizen and legal immigrant taxpayers to pay a new healthcare tax in order to subsidize healthcare for California residents who are living in the country illegally. Yes, you read that right. The tax that Gov. Gavin Newsom wants to impose is a penalty on all those who don’t comply with the “individual mandate.” If this sounds familiar, it should. The individual mandate was a key component of Obamacare at the federal level until the penalty was repealed by the Republican-led Congress in 2017.
If it passes, California would be one of only four states imposing a tax on those who won’t or can’t obtain the kind of health insurance coverage the government requires. The state-imposed mandate would parallel the federal mandate which, in 2016, amounted to $695 per adult or 2.5 percent of yearly household income, whichever was higher. The tax is projected by Newsom to generate about $1 billion over three years.
Adding insult to injury, a portion of that $1 billion generated would go to provide healthcare coverage to people living in the country illegally. Currently, full-scope Medi-Cal benefits are provided to illegal immigrants up to the age of 19. This proposal, estimated to cost about $100 million, would extend that eligibility to the age of 26.
We doubt that imposing a healthcare tax on citizens and legal residents to generate funds for healthcare benefits for illegal residents will resonate with voters. At this point, it is unclear whether the penalty will be labeled as a tax by the legislature. Its inherent unpopularity might compel politicians to call it a “fee” or a “charge” instead of a tax. But proponents need to understand two things. First, the United States Supreme Court has labeled Obamacare’s penalty as a tax — indeed that is the only thing that saved Obamacare’s constitutionality and, second, California voters know a tax when they see one.
In California, if the Legislature imposes a tax, it must receive a two-thirds vote of each house. Because the Democrats have a solid two-thirds-plus majority, one would assume that this threshold will be met. However, after the recall of then-Sen. Josh Newman for his support of the infamous gas tax hike, and the recent drubbing of Measure EE in Los Angeles, who knows what moderate Democrats may be thinking about voting for a new tax hike.
Finally, there is something unseemly about the individual mandate and the penalty for non-compliance. The tax for not buying insurance was one of the Affordable Care Act’s most unpopular features and many Americans cheered when it was repealed as part of the federal tax reform legislation.
The notion that government can force you to buy a product that you may not want is inconsistent with basic precepts of freedom and individual responsibility. In resurrecting the individual mandate and penalty, California is only reinforcing its image as a high-tax and limited-freedom place to live. That’s probably why more than one million residents — mostly middle class — have bailed out to other states that still retain a modicum of sanity.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.