On his CNBC show, Larry Kudlow distorted a provision in the health care reform bill proposed by Sen. Max Baucus (D-MT) to claim that “if an individual opts out of this insurance plan ... apparently they face a $25,000 fine, or imprisonment, or both.” In fact, the bill would levy a $1,900 “excise tax” on those who don't purchase health insurance; those who refuse to pay the tax could face a fine or prison sentence, as the Wall Street Journal editorial Kudlow cited as the source of his claim clearly stated.
Kudlow's claim: Individuals “face a $25,000 fine, or imprisonment, or both” for “opt[ing] out of this insurance plan”
From the September 29 edition of CNBC's The Kudlow Report:
KUDLOW: So the threat of government takeover is still out there one way or another.
SEN. JON KYL (R-AZ): Yes.
KUDLOW: Now let me just ask you, from this Republican ad, and just generically. There's a lot of tax hikes in the Baucus bill.
KUDLOW: And particular for putting mandates -- insurance coverage mandates -- on individuals and businesses. What caught my eye from a Wall Street Journal editorial and other commentary, if an individual opts out of this insurance plan, if they just say, “I don't want to buy insurance right now,” apparently they face a $25,000 fine, or imprisonment, or both, all for something that Senator -- that President Obama keeps saying is not a tax. So the IRS is going to fine you, and you may wind up going to jail.
In fact, those who don't pay “excise tax” for opting out could face fine or prison
Bill establishes a $1,900 “penalty” for those who violate the personal responsibility requirement. Baucus' bill, the America's Healthy Future Act of 2009, includes a "Personal Responsibility Requirement" that states, “Beginning in 2013, all U.S. citizens and legal residents would be required to purchase coverage.” Changes to the bill established a maximum penalty of $1,900 for violating this requirement.
Politico: “Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty.” As the Politico noted in a September 25 report, Sen. John Ensign (R-NV) received a note from Tom Barthold, chief of staff for the Joint Committee on Taxation, “confirming the penalty for failing to pay the up to $1,900 fee for not buying health insurance.” Politico reported: “Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote.”
Indeed, WSJ editorial Kudlow cited states that “if you don't pay” excise tax “the IRS could punish you with a $25,000 fine or up to a year in jail.” From the September 29 Wall Street Journal editorial:
Chairman Max Baucus's bill includes the so-called individual mandate, along with what he calls a $1,900 “excise tax” if you don't buy health insurance. [...] And, lo, it turns out that if you don't pay that tax, the IRS could punish you with a $25,000 fine or up to a year in jail, or both.