A credible IRS is crucial

It didn't take long for the IRS scandal to metastasize. Last week, the mid-level bureaucrat at the center of the mushrooming affair, Lois Lerner, invoked her constitutional right to avoid self-incrimination. Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, said the public should draw no inference from her refusal to testify about the “outrageous IRS targeting of Americans for their political beliefs.”

Right. “What's she hiding?” Rep. Vern Buchanan (R-Fla.) told Politico. “The American people demand and deserve answers.” House Speaker John Boehner (R-Ohio) set the tone by demanding before the first hearing that someone go to jail.

The Obama administration did little better in its effort to avoid getting bogged down in multiple congressional investigations. The president dispatched Attorney General Eric Holder to launch his own investigation even though IRS officials testified under oath that there had been no communications between the White House and the IRS, which was also the finding of the Treasury's inspector general.

So what does any of this have to do with healthcare reform, you may be asking? Last week, I called the head of the scrupulously nonpartisan Tax Policy Center in Washington to see if the scandal would have any impact on the IRS' ability to carry out its role in the Patient Protection and Affordable Care Act, aka Obamacare. His answer: “I don't know.”

That's a disturbing response. The IRS' entire mission—collecting taxes—depends on the American people's faith in its ability to carry out the law in a fair and evenhanded manner. If it loses its credibility, the rollout of healthcare reform is doomed.

Let us count the ways the IRS will be crucial to carrying out the law.

The IRS will be responsible for determining household income and eligibility for insurance subsidies on the state and federal exchanges, as well as imposing a tax on people who fail to buy insurance.

The IRS will be assessing a $2,000-per-employee penalty on employers with more than 50 workers who do not offer health insurance coverage to their workers. It will allocate tax credits to small businesses with fewer than 25 workers that offer coverage as long as they pay for half the cost.

To finance healthcare reform, the IRS will be collecting a slew of new and expanded taxes. They include a 0.9% Medicare surtax on family incomes over $250,000 and individual incomes over $125,000, and expanding the Medicare payroll tax to cover interest, dividends and capital gains, which go mostly to the well-off. Indeed, 85% of the $318 billion raised over the next decade by those two levies will come from the top 1% of households.

The IRS will be collecting new taxes from the medical device, pharmaceutical and health insurance industries. Starting in 2018, it will impose a tax on Cadillac plans, which will require it to determine if the cost of family coverage exceeds $27,500.

But it isn't just anti-tax fever that is motivating the Tea Party-backed opponents of Obamacare. Last week, Rep. Michele Bachmann (R-Minn.) told ABC News that Americans' “most personal, sensitive, intimate, private healthcare information is in the hands of the IRS that's been willing to use people's tax information against political opponents of this administration.”

IRS officials have repeatedly testified on Capitol Hill—long before the current affair—that they would have no access to personal health information. The journalism watchdog Factcheck.org called the Bachmann slur an example of “Republican overreach” on the IRS issue.

We're at a moment when what the uninsured public and small employers need is honest, dispassionate information about the rollout of reform. What we've got instead is a public square dominated by political opportunists whose only mission is undermining the law and politically destroying its namesake.

Follow Merrill Goozner on Twitter: @MHgoozner