A Penalty or a Tax? It’s Both

Is the “individual mandate” in President Barack Obama’s health-care law a penalty, or is it a tax? Through a series of comic accidents, this has become the most important question facing our nation.

When designing the legislation that became the Affordable Care Act, the president borrowed what had been the central idea of Republican health-care-reform proposals in the early 1990s, as well as the central idea of Governor Mitt Romney’s health-care reform in Massachusetts. This was a requirement that almost every adult American either carry insurance or pay a fine. The Obama folks were eager to categorize this fine as a penalty, not a tax, because he had promised not to raise taxes on people earning less than $200,000 ($250,000 for a couple).