Texas public policy foundation
How Obamacare Empowers the IRS

By John Davidson and Emily Poirier

In a speech this week before the U.S. Senate, Florida Senator Marco Rubio reminded the Senate that the Internal Revenue Service, whose chief was forced to resign Wednesday amid scandal, is empowered under the Affordable Care Act (aka ObamaCare) to hand out penalties to the uninsured and also to employers whose workers use federal subsidies to purchase coverage on health insurance exchanges. If the exchanges are the vehicles by which Obamacare is enforced, Rubio said, the IRS is the "front line of enforcing [it]."

"This same IRS that was willing to target groups because of their political leaningsā€¦ this same IRS will now have unfettered power to come after every American and ensure that either you're buying insurance or you're paying them a tax," he said.

In fact, the IRS may have already overstepped its authority in the implementation of the federal health care law. Oklahoma Attorney General Scott Pruitt filed a lawsuit against the federal government late last year alleging the agency violated the Administrative Procedures Act and conflicted with the ACA when it issued a rule extending tax credits and subsidies to those who purchase insurance through a federal exchange. The ACA authorizes tax credits and subsidies only for state-based exchanges. An identical lawsuit was filed this month by a group of small businesses and individuals, who claim the IRS rule will result in taxes which Congress did not authorize.

The intent of the ACA's exchange provisions was to induce states to create exchanges on their own by offering t ax credits and subsidies for insurance plans sold on the exchanges. When dozens of states declined to set up exchanges, the IRS attempted to "correct" the problem by claiming, contrary to the text of the ACA, that credits and subsidies also applied to insurance plans sold on federal exchanges.

Unless the lawsuits are successful, many Americans will have to decide between buying government-approved insurance and paying a hefty tax to the IRS.

If the current IRS scandal makes anything clear, it is that we should never have empowered this unaccountable and untrustworthy agency with the enforcement of Obamacare.