Excise Tax Definition

[Jophiel]

This weekend, the point came out that Obama says a potential fine for failing to carry health insurance is not a tax but that the Senate health bill explicitly calls the fine a tax:

The consequence for not maintaining insurance would be an excise tax. If a taxpayer‘s MAGI is between 100-300 percent of FPL, the excise tax for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or an individual claimed as a dependent) is $750 per year. However, the maximum penalty for the taxpayer unit is $1,500. If a taxpayer‘s MAGI is above 300 percent of FPL the penalty for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or as an individual claimed as a dependent) is $950 year. However, the maximum penalty amount a family above 300 percent of FPL would pay is $3,800.

However, the IRS definition of an excise tax doesn’t seem to include fines:

Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline. Excise taxes are often included in the price of the product. There are also excise taxes on activities, such as on wagering or on highway usage by trucks. Excise Tax has several general excise tax programs. One of the major components of the excise program is motor fuel.

Other sources I’ve looked at all seem to include examples of things you do, rather than things you fail to do. Without arguing Obama or health care, is the Senate bill using the term “excise tax” correctly? Are there other examples of something labeled an excise tax which is a fine for failure to do something?

[thelurkinghorror]

I agree, it is a weird usage of “excise,” but maybe my definition is too narrow.

If you don’t withdraw money from an IRA after age 70.5, then the IRS assesses a penalty on the IRA. It is explicitly called excise here.

ETA:

Wikipedia says that in the US: “In the U.S. constitutional law sense, an excise includes gift taxes, estate taxes, payroll taxes, sales taxes, miscellaneous excise taxes, and income taxes on any income other than income from property, etc. – in short, any tax that is not a direct tax.[6] In the U.S. statutory sense, however, only the Subtitle D and E taxes are denoted as “excises.””

[Jophiel]

@thelurkinghorror

Wikipedia says that in the US: “In the U.S. constitutional law sense, an excise includes gift taxes, estate taxes, payroll taxes, sales taxes, miscellaneous excise taxes, and income taxes on any income other than income from property, etc. – in short, any tax that is not a direct tax.[6] In the U.S. statutory sense, however, only the Subtitle D and E taxes are denoted as “excises.””

Hard to argue with that

[Earl_Snake-Hips_Tucker]

It’s also worth noting that the roots of excise (tax) and excise (to cut out) are different, and that the tax “excise” has a common origin with the word “assess,” while the latter is a pretty literal translation of it’s Latin origin.