Earlier this week I mentioned to you the ridiculous Patient Centered Outcomes Trust Fund Fee that HRAs must pay. I called it the most ridiculous tax ever. Jason Dinesen posts a real example of what he went through for one client.
While Jason’s example is dead-on accurate (I know, I went through the same thing for a client), I think he misses the most futile portion of the exercise. Consider what the IRS will bring in as revenue from this tax from small businesses. Note that most small businesses use health insurers; the health insurance companies pay based on the total number of individuals covered. The small business owners only pay for the HRA; these usually cover the owner, his or her spouse, and children. That should make the average revenue from small businesses to be about $3. Now, let’s add up the costs that the IRS will face:
– Opening the mail;
– Processing the checks (making sure they are credited to the correct excise tax and correct account);
– Depositing the checks;
– Processing the Form 720 excise tax returns;
– Sending out notices to filers who make mistakes; and
– Cost to respond to replies to notices.
Even with full automation in opening mail (which the IRS has), almost each of these steps will cost more than $3. Taken together, the cost for this tax is far more than what the revenue will bring in.
Now let’s look at this from the standpoint of the client. Let’s assume that the bill to the client is $100. Add in the cost of the tax of $3, administrative costs (I’ll be generous and call this $2), and the total cost to the client is $105. That’s $105 out of a business’s net income for a completely useless exercise in bureaucratic futility.
This tax is Exhibit A in why ObamaCare is unpopular, unworkable, and insane.