Sun, 16 Jan 2011 12:32:53 +0000
Postponed by the Tucson, Arizona shooting, the House of Representatives finally will vote to repeal Obamacare this week. Americans for Tax Reform reminds us of one important reason to oppose Obamacare:
It is one of the largest tax increases in American history.
Here’s a comprehensive list of the two dozen new or higher taxes that pay for Obamcare’s expansion of government spending.
1. Individual Mandate Excise Tax (January 2014): Anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following. Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS):
|1 Adult||2 Adults||3+ Adults|
|2014||1% AGI/$95||1% AGI/$190||1% AGI/$285|
|2015||2% AGI/$325||2% AGI/$650||2% AGI/$975|
|2016+||2.5% AGI/$695||2.5% AGI/$1,390||2.5% AGI/$2,085|
2. Employer Mandate Tax (January 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2,000 for all full-time employees. This provision applies to all employers with 50 or more employees.
If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3,000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).
Combined score of individual and employer mandate tax penalty: $65 billion/10 years.
3. Surtax on Investment Income ($123 billion/January 2013): This increase involves the creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income.
*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8 percent surtax does not apply to non-resident aliens.
4. Excise Tax on Comprehensive Health Insurance Plans ($32 billion /January 2018): New 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family). CPI +1 percentage point indexed.
5. Hike in Medicare Payroll Tax ($86.8 billion/January 2013): Current law and changes:
|All Remaining Wages
|Obama Tax Hike||1.45%/1.45%
5. Medicine Cabinet Tax ($5 billion/January 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
6. HSA Withdrawal Tax Hike($1.4 billion/January 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
7. Flexible Spending Account Cap — “Special Needs Kids Tax” ($13 billion/January 2013): Imposes cap of $2,500 (indexed to inflation after 2013) on FSAs (now unlimited). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
8. Tax on Medical Device Manufacturers($20 billion/January 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3 percent excise tax. Exemptions include items retailing for less than $100.
9. Raise “Haircut” for Medical Itemized Deduction From 7.5 percent to 10 Percent of AGI ($15.2 billion/January 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI; it is waived for taxpayers 65 or older in 2013-2016 only.
10. Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons.
11. Elimination of Tax Deduction for Employer-Provided Retirement Rx Drug Coverage in Coordination With Medicare Part D ($4.5 billion/January 2013).
12. Blue Cross/Blue Shield Tax Hike ($0.4 billion/January 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services.
13. Excise Tax on Charitable Hospitals(Min/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS.
14. Tax on Innovator Drug Companies($22.2 billion/January 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.
15. Tax on Health Insurers($60.1 billion/January 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. The stipulation phases in gradually until 2018, and is fully-imposed on firms with $50 million in profits.
16. $500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 billion/January 2013)
17. Employer Reporting of Insurance on W-2 (Min./January 2011): Preamble to taxing health benefits on individual tax returns.
18. Corporate 1099-MISC Information Reporting ($17.1 billion/January 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers.
19. “Black Liquor”($23.6 billion): This is a tax increase on a type of bio-fuel.
20. Codification of the “Economic Substance Doctrine” ($4.5 billion): This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.