Baucus Considered Taxing Online Pornography to Fund Obamacare

Baucus Considered Taxing Online Pornography to Fund Obamacare
August 17, 2012

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Over the past week, the dueling presidential campaigns have been arguing back and forth about President Obama's cuts to Medicare, which total $716 billion over ten years. Now, these cuts aren't the worst thing in the world, and they're being demagogued to a disturbing degree, with the implication being that the cuts are to benefits as opposed to mostly hitting provider payments, and implying that these are real cuts as opposed to "Washington cuts" (as in, cuts to the rate of expected growth).

That being said, studies consistently show that these cuts are likely to impact quality of care, which does matter in terms of the Medicare recipient's experience and health outcomes. The fact that Obama chose to double count them in a bit of budgetary chicanery makes them even worse. He should've listened to this guy.

But the funding for Obama's massive overhaul had to come from somewhere, and in this case the funds taken from Medicare were only part of the picture. There was a host of other tax hikes deployed under Obamacare, including many that are already being collected, like the excise tax on Charitable Hospitals, a tax on "black liquor" bio-fuel, a tax on innovator drug companies, a Blue Cross/Blue Shield tax, a tax on the tanning industry, a tax increase on HSA/FSA/HRA dollars by barring their use for over the counter medicine, another tax on early withdrawals from HSAs... all of these have already gone into effect.

One tax that was considered as a funding source for Obamacare by the Democrats, however, would likely have been far more controversial than all of these put together, and certainly would've grabbed a lot of headlines: a tax on online porn.

According to longtime Democratic Hill staffer John McDonough, writing in his new book Inside Health Reform, Democratic Sen. Max Baucus and his Senate Finance staff considered numerous sources for other taxes for purposes of funding Obamacare, including elective cosmetic surgery (a boob job tax), a tax on sugary beverages (Michael Bloomberg would've loved it), as well as sin taxes on alcohol or tobacco sales.

One they considered very seriously, according to McDonough, was "a tax on online pornography."

Politically, pushing this tax would've served Democrats' purposes of creating trouble for their Republican opposition - many social conservatives would be put in a difficult spot. And the porn industry remains a consistent moneymaker (some estimates conclude it's a $12-13 billion industry) and increasingly makes most of its money via the internet, so taxing it would serve the dual purpose of opening the door for more online taxes.

Ultimately, Senate Democratic staffers rejected the idea as unworkable. Medicare, it seems, was a much easier target for revenue.

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)