Obamacare: 20 Taxes
August 10, 2012
By Nancy Thorner and Jane Keill -
By now, you have become familiar with this promise made by our President:
“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” President Barack Obama, September 12, 2008
Here is the Obamacare kicker, which could rightly be called the “Mother of all Deceptions.”
During Obama’s 2008 campaign, and continuing throughout his administration, one of the President’s largest selling points is that the American people will not have to worry about having their taxes raised (except of course, the very wealthy, but that’s another discussion). Obama promised we could keep our doctors, our health care plans and we wouldn’t have to pay anything extra for a universal health care program.
Only knaves and fools could believe that Obamacare is going to reduce costs while providing better care for the American people and not blow up the Federal budget in the process, when 50 million or so additional Americans are added to the government healthcare system.
It is only because the expensive medical mandates in Obamacare were purposely put off until 2014, well after the November election, that many Americans are not yet aware of how the law will affect their financial well-being, yet alone the quality of their healthcare.
What most Americans fail to realize is that the Obamacare bill contains 20 new taxes on families and large and small businesses, thereby representing the largest tax increases in American history.
The 2000+ pages of Obamacare are riddled with hidden time bombs, set to go off at different intervals and often with little or no warning of their presence. Over the next ten years the American people will be hit with $500 billion-plus in tax hikes.
Some of the taxes have already gone into effect in 2010-2012, and are being collected, but many will not start until 2013-2014, or later – after the November election when it will be too late to change the country’s direction.
When Chief Justice, John Roberts, of the Supreme Court made his recent decision that Obamacare is a “tax”, he took the promises right out of Obama’s mouth and put them on the backs of the American people. Whether you personally think the mandate is a tax or a penalty, Obamacare will hit you with taxes you are not expecting and for which you cannot prepare.
Yet, President Obama and his surrogates have stated over and over that the ACA (Obamacare) is not a ‘tax’. White House Press Secretary, Jay Carney stated the following:
“It’s a penalty, because you have a choice. You don’t have a choice to pay your taxes, right?” Carney said. Carney was initially reluctant to assign a label to the ‘fine’ when pressed repeatedly by reporters. “Call it what you want,” Carney said…“If you read the (Supreme Court) opinion, it is not a broad-based tax. It affects one percent, by CBO estimates, of the population. It is not something that you assess like an income tax.”
It’s unclear which Congressional Budget Office estimate Carney was referring to. Despite being pressed on the issue, Carney would not relent his position.
Some of the 20 new taxes imposed by Obamacare on families and large and small businesses have already been reviewed in earlier articles published in our Obamacare series. Following, however, is a brief discussion of the 20 taxes all listed together in one location, so you are better able to recognize how they might affect you in the years to come.
The first 11 taxes will hit the middle and upper classes the hardest. They apply to young, healthy people, the wealthy, the middle class and the sick, elderly and disabled. They do not, of course, apply to the 48% of Americans who do not pay any taxes!
1. Individual Mandate Excise Tax: (Jan 2014) Starting in 2014, this provision will require a couple to pay the higher of a base tax of $1,360 per year, or 2.5% of adjusted growth income starting with lower base tax and rising to this level by 2016. Individuals will see a base tax of $695 and families a base tax of $2,085 per year by 2016. Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty level, members of Indian tribes, and hardship cases (determined by HHS). www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 - www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
2. Employer Mandate Tax: (Jan 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 $2000 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 $3000. 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).
This provision results in three possible actions by the employers. 1. The first is provide some level of health insurance, as many do today, and there would be no impact on employees. 2. The second choice is to pay the penalty, which would most likely be less expensive than providing health insurance, and force employees to seek their own health insurance or purchase it through federal government controlled state exchanges. (Studies have estimated that 20 million Americans will lose their employee funded health insurance as a result of this provision and employers electing this option.). 3. The third choice is for employers to lay off employees, or not hire additional employees, because Obamacare forces them to either provide health insurance or pay the new tax. www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 -www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
3. Surtax on Investment Income: ($123 billion/Jan. 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). In addition, it will raise the Capital Gains Tax from 15% to 23.8% on investment income for these households and will raise taxes on dividends from 15% to 43.4% for the same households. Aside from the impact on retired citizens dependent on dividends, this provision will pull income from the private economy.
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home. If you sell a $400,000 home, there will be a $15,200 tax. This bill will have a deleterious effect on the older generation — who often downsize their homes after retirement. http://ncrenegade.com/financial/federal-home-sales-tax-coming-soon-in-2013-thank-you-obama/
4. Excise Tax on Comprehensive Health Insurance Plans: ($32 bil/Jan 2018) Starting in 2018, this is a new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). A higher threshold for early retirees and high-risk professions exists ($11,500 single/$29,450 family). The reason it begins in 2018 is because most unionized workers are covered by plans that fall under this definition and a deferral was made to spare union members from this tax for at least a period of time. www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 – www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
5. Hike in Medicare Payroll Tax: ($86.8 bil/Jan 2013) Once your income exceeds $200,000/$250,000, you will pay an additional 0.9% tax. Note that the employer will only collect and be responsible for this tax if you earn $200,000/$250,000 or more. This also impacts the self-employed. And the law is written so that the self-employed cannot deduct half of the new tax as a deduction to income tax. (It’s possible this provision may be dead.) www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
6. Medicine Cabinet Tax: ($5 bil/Jan 2011) Americans will no longer able to use Health Savings Accounts (HSA), Flexible Spending Accounts (FSA) or Health Reimbursement Accounts (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758
7. Health Savings Account Withdrawal Tax Hike: ($1.4 bil/Jan 2011) This increase is an additional tax on non-medical early withdrawals from HSAs from 10% to 20 %. IRAs and other tax-advantaged accounts remain at 10 percent. www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 -
8. Flexible Spending Account Cap – aka “Special Needs Kids Tax”: ($13 bil/Jan 2013) Imposes a cap of $2500 on FSAs, which are now unlimited. 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 the old tax rules, FSA dollars can be used to pay for this type of special needs education but under Obamacare they will now be capped at $2500. www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 -
9. Tax on Medical Device Manufacturers: ($20 bil/Jan 2013) Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax on all items retailing for more than $100. This provision will not only drive up the cost of various medical devices ranging from mobility assistance devices to personal testing supplies, but will also impact an industry that employs so many people across our country. www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 – www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
10. Medical Itemized Deduction: ($15.2 bil/Jan 2013) This deduction goes from 7.5% to 10%. Currently, those facing high medical expenses are allowed a deduction for health costs 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 65+ taxpayers in 2013-2016 only. www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 -
11. Tax on Indoor Tanning Services: ($2.7 billion/July 1, 2010) (Also called the “Snooki” tax) New 10 percent excise tax on Americans using indoor tanning salons. www.atr.org/comprehensive-list-tax-hikes-obamacare-a5758 -
The remaining nine taxes will primarily hit businesses of various sizes and types, or highly paid executives, and may not have direct bearing on the middle class citizen. Their effect, however, can be just as strong since the businesses affected will likely pass their costs on, in one form or another, to their customers – you.
12. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D: ($4.5 bil/Jan 2013). www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
13. Blue Cross/Blue Shield Tax Hike: ($0.4 bil/Jan 2010) The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
14. Excise Tax on Charitable Hospitals: (Min$/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. www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
15. Tax on Innovator Drug Companies: ($22.2 bil/Jan 2010) A $2.3 billion annual tax on the industry imposed relative to share of sales made that year. www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
16. Tax on Health Insurers: ($60.1 bil/Jan 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. www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
17. $500,000 Annual Executive Compensation Limit for Health Insurance Executives: ($0.6 bil/Jan 2013) If you work in the health industry, you will be limited to a salary of $500,000. www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
18. Employer Reporting of Insurance on W-2: (Min$/Jan 2011) Preamble to taxing health benefits on individual tax returns. www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
19. “Black liquor” tax hike: (Tax hike of $23.6 billion) This is a tax increase on a type of bio-fuels (paper production and cellulosic biofuels). This went into effect in 2010. www.taxabletalk.com/2012/07/01/its-a-tax-what-obamacare
20. Codification of the “economic substance doctrine”: (Tax hike of $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. www.breitbart.com/Big-Government/2012/06/29/Seven-new-taxes
Whether you like Obamacare or don’t like it; whether you agree with a national health program of some kind, or don’t agree, the above taxes are real and will have a direct effect on your lives and on your businesses and the American economy.
If Obamacare is not overturned, repealed and eliminated, we will all be paying the penalties that are buried in its 2000+ pages.
Other articles in Obamacare series:
- Obamacare: In the Beginning Nancy Thorner and Jane Keill Tuesday, July 17, 2212 2012 http://illinoisreview.typepad.com/illinoisreview/2012/07/obamacare-in-the-beginning.html
- Obamacare: Death Panels Nancy Thorner and Jane Keill Friday, July 20, 2012
- Obamacare: You can keep your doctor Nancy Thorner and Jane Keill Tuesday, July 24, http://illinoisreview.typepad.com/illinoisreview/2012/07/obamacare-you-can-keep-your-doctor.html
- Obamacare: The Popular Benefits Nancy Thorner and Jane Keill Friday, July 27, 2012
- Obamacare: Insurance Plans and Government Exchanges Nancy Thorner and Jane Keill Thursday, August 1, 2012http://illinoisreview.typepad.com/illinoisreview/2012/08/obamacare-insurance-plans-and-government-exchanges.html
- Obamacare: Medicare Nancy Thorner and Jane Keill Friday, August 3, 2012
- Obamacare: Medicaid - Nancy Thorner and Jane Keill Tuesday, August 7, 2012