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Strange Birds

Just when it seems American tax policy could not get any weirder, congressional leaders pull another turkey out of their legislative hat. The Senate’s health reform legislation serves up a couple of these gobblers: A get-out-of-jail-free card for certain tax evaders, and the infamous “Botax.”

The Botax story is straightforward. Senate Majority Leader Harry Reid, D-Nev., needed money to offset the cost of the health care expansion in the bill he crafted from several committees’ proposals. And he needed to get that money from a constituency that would not find any sympathy among the 60 members of his caucus, since Reid must hold all 60 votes to pass his legislation over Republican objections.

So Reid decided to pick on Americans who have elective cosmetic procedures. They would pay a 5 percent surtax on top of the cost of the surgery or other treatments, which are seldom covered by insurance. Reid must have figured that women (the great majority of these patients) who receive Botox injections or anatomical enhancements deserve to pay to provide health insurance for everyone else. The price of vanity, one supposes.

Reid’s proposal would turn plastic surgeons into revenue agents, apparently on the theory that they, like their patients, ought to do something he considers useful to society. Reid’s staff no doubt researched the issue by watching old episodes of Nip/Tuck.

I don’t live in Nevada. In my part of the world, a lot of cosmetic surgery is performed on teenagers who want to reform their noses. Often, the surgeon begins by breaking the youth’s nose with a mallet. It seems to me that if a young person wants to go through this, and her parents are willing to pay for it, she has got to be in considerable distress. Good old Harry sympathizes, I’m sure. But, as his spokesman said, they had to get the money somewhere.

Here’s an alternative: Look on the gridiron. Every autumn weekend across America, young men in shoulder pads bash each other’s heads and slam one another to the ground. This, naturally, produces a lot of injuries, ranging from torn ACLs to brain-damaging concussions. Want to tax avoidable medical procedures? Tax the fees that are paid to try to put these young men back into working condition. My guess is that Reid could find more money this way than by going after nose jobs and breast implants. Don’t hold your breath, though. Undoubtedly, more senators have played football than have received nose jobs. (You may insert your own wisecrack about brain-damaging concussions.)

Let’s move on to that get-out-of-jail-free card. The health reform legislation passed by the House, as well as the Senate version, requires most Americans to carry health insurance. Those who do not would face a special penalty tax. This tax would, in turn, help subsidize insurance for those unable to afford it.

Republicans seized on these facts to note that the net effect is that anyone who refuses to either carry insurance or pay the tax would risk going to prison. Rep. Peter Roskam (R.-Ill.) waved a pair of shiny silver handcuffs to taunt House Democrats. Rep. Dave Camp (R-Mich.), the ranking Republican on the House Ways and Means Committee, said, “This is the ultimate example of the Democrats’ command-and-control style of governing — buy what we tell you or go to jail. It is outrageous and it should be stopped immediately.”

The mature response would have been to point out to Republicans that, yes, taxes have to be paid and, yes, sometimes it takes the prospect of fines or prison to get people to pay them. Maturity, however, is in short supply at the Capitol these days.

House Democrats instead took the bizarre approach of arguing that, really, going to jail is not much of a risk. "It's like saying you could be jailed for jaywalking," said Rep. Robert Andrews (D-N.J.) in response to Republican objections. "I'm sure there are some narrow circumstances in which that would happen, but it doesn't happen as a practical matter."

Senate Democrats had an equally bad answer. The Senate Finance Committee offered an amendment specifying that no one could face prison or civil penalties for not paying the tax. Instead, the amount would come out of refund checks. Offenders who are not owed refunds would get off scot-free.

So it’s okay to cheat on your taxes, as long as it’s only on the portion that goes to health care. Don't want to pay your taxes to support the military? Go to jail. Don't want to support Social Security? Go to jail. Farm subsidies? Pay up...or go to jail. But health insurance? Not to worry.

Health care represents one-sixth of the American economy, which is by far the largest on the planet. Leaders of both houses are pulling out all stops to overhaul the health care sector by the end of the year. It is fair to say that the entire world has a big stake in this debate.

And the debate is along these lines: REPUBLICANS: Your sister has cooties! DEMOCRATS: Shut up, bucket face!

Why would anyone put this group in charge of a high school student council, let alone the U.S. Congress?

I have no short-term solution, but I do have an idea about how to get better laws down the road. Let’s amend the Constitution to prohibit ex-football players from legislating.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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