“On Monday, the Senate will take up the president’s recent proposal to tax people who don’t have high enough credit scores in order to ensure that everyone in the country has good credit and access to the nations financial system. In proposing the plan, the president affirmed his belief that everyone should have access to credit, and that a low credit score prevents people from getting affordable loans ‘just like a pre-existing condition prevents people from getting health insurance.’ The president also lamented the fact that the system appears to be broken, stating, ‘similar to the way in which the costs of healthcare, both in terms of medical treatment and health insurance, are passed on to the people who pay insurance and medical treatment out of pocket, people with low credit scores, particularly those who file bankruptcy, cause an increase in both the price sellers charge for goods and services, as well as the interest rates financial institutions charge to allow us to purchase such goods and services on credit, since retailers and such institutions must cover the cost of those who default on credit, creating a burden on society.’ As for the structure of the law, the proposal contains an ‘individual mandate’ requiring people to have credit scores above 600 by January 1, 2015, or they will have to pay a tax, which will be fairly low at first, but increase over time. In addition, the bill also contains a lender mandate, requiring banks and credit card companies to offer credit to everyone, and to do so at the same interest rate and terms no matter the borrowers credit score, or they would have to pay a fine. Joe Manchin-WV, one of the more conservative Democratic members of the Senate, seemed concerned that ‘the rate would have to be pretty high to allow the lenders to cover themselves financially from those whose scores are still relatively low.’ Some economists have also predicted that there would simply be less lenders in the market, causing credit to dry up. Finally, similar to the ACA’s 2.3% tax on devices used in medical treatment, the plan calls for a tax on accounts used in purchasing goods and services, whether a mortgage, credit card, or bank account, and which, like the medical device tax, is expected to be passed on to consumers. Because this is a tax, and so similar in structure to the ACA, which has already been ruled constitutional under the Federal governments taxing power, set forth in Art. I, Sec. 8, it is expected to pass the Senate easily, though its fate in the House is less certain.”
Posted on: Sat, 19 Oct 2013 00:28:32 +0000
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