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Adam Radman

IRS Obamacare Power of the Day: High Medical Bills Tax


Posted by Adam Radman, Ryan Ellis on Thursday, August 8th, 2013, 12:24 PM PERMALINK


Throughout the summer, Americans for Tax Reform will be highlighting the most outrageous new powers that the IRS will have under the Obamacare law.  According to a report from GAO, the IRS is tasked with nearly four dozen new powers under that law.  Each day, one will be selected for a brief review. 

Americans have long been allowed to deduct out of pocket medical expenses as an itemized deduction on their taxes. They cannot have already benefited from other tax provisions for health care like tax-free employer-provided care or tax-free accounts like flexible spending accounts (FSAs) or health savings accounts (HSAs). A full list of qualified expenses can be found in IRS Publication 502.

After totaling all unreimbursed, out-of-pocket medical expenses, the taxpayer must then subtract from this figure an amount equal to 7.5 percent of the taxpayer's adjusted gross income (AGI). This subtraction amount is known commonly as a "haircut."

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. They deducted $80 billion in medical expenses after applying the “haircut.” The Office of Management and Budget reports that this tax deduction saves these taxpayers upwards of $10 billion annually.

The Obamacare law made one change to this tax provision: it raised the "haircut" from 7.5 percent of AGI to 10 percent of AGI. Since virtually all taxpayers claiming this income tax deduction make less than $200,000 per year, the income tax hike falls almost exclusively on the middle class:

-Virtually every family taking this deduction made less than $200,000 in 2009. Over 90 percent earned less than $100,000.

-The average taxpayer claiming this deduction earns just over $53,000 annually.

-ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 - $400 per year.

-This income tax increase is focused on families with the largest medical bills that weren't covered by insurance. So the target population is low-and middle-income families with debilitating medical costs. That's a good definition of the opposite of “affordable” or “caring.”

According to the Joint Tax Committee, this tax increase is scheduled to raise between $2 billion and $3 billion annually. That may be a drop in the bucket in Washington DC, but try telling that to the $53,000 family with high medical bills that just saw a tax increase.

The tax is a clear violation of President Obama's "firm pledge" in 2008 to not enact "any form of tax increase" on these families.

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IRS Obamacare Power of the Day: Red Tape Tax Credit


Posted by Adam Radman, Ryan Ellis on Wednesday, June 26th, 2013, 9:31 AM PERMALINK


Throughout the summer, Americans for Tax Reform will be highlighting the most outrageous new powers that the IRS will have under the Obamacare law.  According to a report from GAO, the IRS is tasked with nearly four dozen new powers under that law.  Each day, one will be selected for a brief review.

Obamacare creates a tax credit for small employers to comply with Obamacare.  There’s only one problem—the tax credit is so complex, the IRS and CBO report that no one is using it.

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Taxpayer Protection Pledge Signers Boustany and Landry Prep for Runoff in Louisiana


Posted by Adam Radman on Wednesday, November 14th, 2012, 5:43 PM PERMALINK


In the wake of the election, there has been some confusion over whether Reps. Charles Boustany and Jeff Landry have signed ATR’s Taxpayer Protection Pledge. Both candidates have, in fact, signed the Taxpayer Protection Pledge for this election cycle.

The Pledge, sponsored by Americans for Tax Reform, commits signers to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses … and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."
 
ATR confirms that Rep. Charles Boustany [Pledge] is a long-time supporter of the Pledge, and Rep. Jeff Landry [Pledge] has been a signer since he began his first term in 2010. Neither candidate has ever broken their Pledge to taxpayers.
 
“I want to once again congratulate Dr. Boustany and Mr. Landry for signing the Taxpayer Protection Pledge. Both Congressmen have proven their commitment to opposing higher taxes. Louisiana taxpayers can rest assured that they will continue to have a voice in Congress that stands up for their interests,” said Grover Norquist, president of ATR.

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Biden Should Be the Last Person to Mention Tax Pledges


Posted by Adam Radman on Thursday, October 18th, 2012, 5:56 PM PERMALINK


In a recent campaign stop in Nevada, Vice President Biden attacked Gov. Romney for signing the Taxpayer Protection Pledge to oppose and veto any tax increases. During his speech, Biden purposely distorted the meaning of the Pledge by saying:

“These guys signed a pledge to Grover Norquist, instead they should sign a pledge to you, the middle-class people.” [Quote]

As Americans for Tax Reform has repeatedly pointed out, the language of the Taxpayer Protection Pledge is quite clear. The Pledge is a personal, written commitment by an elected official to taxpayers. The Pledge is made in writing to voters before a politician is elected so that these voters can hold the politician accountable on the tax issue. Pledge enforcement is done by voters, not by Grover Norquist or Americans for Tax Reform.

Back in 2008, Obama and Biden made a tax promise of their own, which they have subsequently broken on numerous occasions.

During the Oct. 3, 2008 vice-presidential debate, in front of 70 million viewers, then-candidate Joe Biden made a promise to the American people:

 “No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised whether it’s their capital gains tax, their income tax, investment tax, any tax.” [Transcript]

Biden’s promise echoed that of then-candidate Barack Obama.  Speaking in Dover, New Hampshire on Sept. 12, 2008, Obama said:

“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.”  [Video]

The Obama-Biden promise was shattered when President Obama signed the Affordable Care Act into law.  Obamacare contains at least seven direct tax hikes that unquestionably violate the Obama-Biden pledge. The five worst are described below:

1. The Obamacare Individual Mandate Non-Compliance Tax:

Starting in 2014, anyone not buying “qualifying” health insurance – as defined by President Obama’s Department of Health and Human Services -- must pay an income surtax to the IRS. The Congressional Budget Office recently estimated that six million American families will be liable for the tax, and as pointed out by the Associated Press:  “Most would be in the middle class.”

In addition, 100 percent of Americans filing a tax return (140 million filers) will be forced to submit paperwork to the IRS showing they either had “qualifying” health insurance for every month of the tax year or they obtained an exemption to the mandate.

Americans liable for the surtax will pay according to the following schedule:

 

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/$1390

2.5% AGI/$2085

 

2. The Obamacare Tax on Union Member and Early Retiree Health Insurance Plans:

Obamacare imposes a new 40 percent excise tax on high cost or “Cadillac” health insurance plans, effective in 2018. This tax increase will most directly affect union families and early retirees, who are likely to be covered by such plans.  This Obamacare tax will be levied on insurance policies whose premiums exceed $10,200 for an individual and $27,500 for a family.  Middle class union members tend to be covered by such plans in states like Ohio, Pennsylvania, Wisconsin, and Michigan.

3. The Obamacare Flexible Spending Account Tax – a.k.a. “Special Needs Kids Tax”:

The 30-35 million Americans who use a Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will, starting in 2013, face a new government cap of $2,500 (currently the accounts are unlimited under federal law, though employers are allowed to set their own cap). 

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 several million middle class families with special needs children in the United States, and many of them use pre-tax FSA dollars 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. This $13 billion Obamacare tax hike will severely limit the options available to these families

4. The Obamacare Medicine Cabinet Tax: 

This $20 billion Obamacare tax increase prevents Americans from being able to use their pre-tax health accounts to purchase non-prescription, over-the-counter medicines. 

According to a study by the Kaiser Family Foundation, 11 percent of Americans who receive health insurance from their workplace are enrolled in a Health Savings Account qualifying health insurance plan.  This amounts to an estimated 16 million covered lives.

Using data from the Employee Benefit Research Institute, it is estimated that 30-35 million Americans take advantage of FSAs at work.

The Obamacare Medicine Cabinet tax prevents these tens of millions of middle class families from being able to purchase everyday medicines using these accounts. Examples of items no longer able to be purchased with pre-tax dollars without a prescription include pain relievers, cold and flu medicines, antacids, nasal sprays, and children’s vitamins.

5. The Obamacare High Medical Bills Tax:

Currently, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  Beginning in 2013, this $15 billion tax increase imposes a threshold of 10 percent of AGI. By limiting this deduction, Obamacare widens the net of taxable income for the sickest Americans.  This tax provision will most harm near retirees and middle class families with modest incomes but high medical bills.

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Nick Lampson Falsely Attacks Randy Weber Over the Taxpayer Protection Pledge


Posted by Adam Radman on Friday, October 12th, 2012, 4:48 PM PERMALINK


In a blatant attempt to mislead the voters of TX-14, the Nick Lampson campaign recently released a false attack ad against Randy Weber for signing the Taxpayer Protection Pledge. Lying about the Taxpayer Protection Pledge isn’t a new tactic for the Democrats, nor is ignoring the fact that independent organizations have called them out on their fallacious claims.

The TV ad suggests that as a Pledge signer, Randy Weber has signed a pledge to “protect special tax breaks for corporations that send American jobs overseas.” Unfortunately, when the same claim was levied against Pledge signers in 2010, the Associated Press labeled the attack as “one of the wildest claims of the 2010 campaign.” Adding insult to injury, the non-partisan FactCheck.org rated the attacks against the Pledge as “blatantly false.”

The Taxpayer Protection Pledge that Randy Weber signed reads as follows:

I, Randy Weber, pledge to the taxpayers of the 14th District of the state of Texas, and to the American People that I will:

ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and

TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing taxes.

As FactCheck.org has noted, “[The Pledge] leaves ample room for the elimination of any number of special tax breaks so long as the overall level of taxation is not increased. To claim that this ‘protects’ a particular provision is simply untrue.” The overall goal of Pledge signers is to reduce the size of the government by focusing on spending alone.

When the DCCC continued with the same attack against Republicans in 2010, another independent fact-checking organization weighed in. To the accusation that the Pledge “protects” companies who ship jobs overseas, Politifact noted that the claim about the Pledge included a “spurious connection” that requires a “huge leap of logic,” concluding that the DCCC’s claim was “False.”

“I applaud Randy Weber for making a personal, written commitment to oppose efforts to increase taxes on Texas taxpayers. Taxpayers everywhere are fed up with the tax-and-spend policies coming out of Washington, DC” said Grover Norquist, president of Americans for Tax Reform. “The most recent false claims by Lampson further demonstrate the difficult time Democrats are going to have defending the Democrat ‘plan’ for economic recovery: higher taxes and more government spending,” continued Norquist.

 

View PDF here

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Can NC-09 GOP Primary Voters Trust the Word of Jim Pendergraph?


Posted by Adam Radman on Monday, April 30th, 2012, 3:20 PM PERMALINK


Recent actions by Mecklenburg County commissioner Jim Pendergraph should have voters scratching their heads and asking where, exactly, he stands on taxes.

On March 29, 2012, Pendergraph signed the Taxpayer Protection Pledge making a written commitment to the voters in NC-09 to oppose tax hikes. However immediately after signing the Pledge, Pendergraph began to distance himself from his promise.

DavidsonNews.Net reported on April 4, 2012, that Pendergraph supported the creation of a new fire service tax on property in Mecklenburg County. The new tax is set to go into effect on July 1, 2012. While his vote was not a violation of the federal “no-tax increases” Pledge, his decision to support a tax hike on the local level should have voters questioning his dedication to them should he be elected to Congress.

Additionally, The Charlotte Observer reported on April 28, 2012, that while Pendergraph signed the Taxpayer Protection Pledge, he ultimately would leave the door open to tax hikes:

He did sign a no-tax increases pledge and said he would focus on spending cuts. But he said he would consider taxes if “every other way possible” was tried and failed to reduce the deficit and get the economy going.

Pendergraph’s actions make a mockery of his written commitment to the taxpayers of NC-09. Cook Political Report (need subscription to access) rates the district as “Solid R” with a PVI of R+11. The GOP primary will most likely decide the next representative of the district. It’s important voters know where the candidates stand on the issues. With Pendergraph flip-flopping on taxes, voters are left with more questions than answers.

Would you believe the wedding vows of a person who promised to love you “till death do us part,” but included an escape clause for one reason or another? No. It’s the same with the Taxpayer Protection Pledge. Candidates and/or elected officials sign the Pledge because they oppose tax hikes as a matter of principle; not as a matter of convenience.

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Gary Moore and the Boone County Park's Initiative


Posted by Adam Radman on Friday, April 20th, 2012, 4:36 PM PERMALINK


Americans for Tax Reform has received several requests to review the implications of the Boone County Parks Fund ad valorem tax proposal and whether, as Judge-Executive of Boone County, Gary Moore supported a tax hike because the proposal was referred to the 2008 General Election ballot.  Moore is currently a candidate for the GOP nomination in KY-04 and a Taxpayer Protection Pledge signer.

In late summer, 2008, the Boone County Fiscal Court passed a resolution proposing a 2.2 cent tax rate on property be referred to the General Election ballot. The objective of the tax rate increase was to raise funds for public parks. To offset the rate increase, and thus make the resolution revenue-neutral, tax rates in several other taxing districts were lowered. The Health Department rolled back their property tax rate from 2.0 to 1.9 cents, the Boone County Public Library Board of Trustees rolled back their tax rate from 6.3 to 5.0 cents, and the Boone County Cooperative Extension District Board lowered their rate from 1.9 to 1.6 cents. The net reduction of these combined taxing districts equaled the 2.2 cent increase put on the ballot in 2008.

While ATR has no opinion on the quality of the proposal, we do believe the proposal was revenue-neutral and not a tax hike. At worst, the decision to raise rates to increase funding for public parks and roll back tax rates for the other districts yielded a revenue-neutral proposal. In reality, the rolling back of tax rates for three other taxing districts actually led to a tax cut, because the Parks Fund ad valorem tax failed at the ballot in 2008.

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U.S. Senate Candidate Dan Severson Signs the Taxpayer Protection Pledge


Posted by Adam Radman on Thursday, April 12th, 2012, 12:59 PM PERMALINK


Former state Rep. Dan Severson (R-Minn.) recently signed the Taxpayer Protection Pledge in his race for Minnesota’s U.S. Senate seat. The Pledge, sponsored by Americans for Tax Reform (ATR), commits signers to “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses … and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

ATR has offered the Pledge to all candidates for federal office since 1987. To date, 41 U.S. Senators and 238 members of the U.S. House of Representatives have signed the Pledge. Additionally, thirteen governors and over 1,200 state legislators have signed the Pledge.

“I want to congratulate Mr. Severson for taking the Taxpayer Protection Pledge. The American people clearly showed their displeasure in the last election cycle with the tax-and-spend policies coming from Washington. They want real solutions that create jobs, grow our economy, and cut government spending,” said Grover Norquist, president of ATR.

“By signing the Pledge, Dan Severson demonstrates that he understands the problems of hard-working taxpayers nationwide, but especially the taxpayers of Minnesota.”

“I challenge all candidates for federal office to make the same commitment to taxpayers by signing the Taxpayer Protection Pledge today,” Norquist continued.

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Taxpayers Clear Winners in Tuesday Special Elections


Posted by Adam Radman on Wednesday, September 14th, 2011, 5:58 PM PERMALINK


Voters expressed their clear dissatisfaction with President Obama’s economic policies by electing Taxpayer Protection Pledge signers in the two special elections yesterday. Mark Amodei will be replacing Sen. Dean Heller, also a Pledge signer, in Nevada’s second congressional district while Bob Turner will be replacing the disgraced Democrat Congressman Anthony Weiner in New York’s ninth congressional district.

The addition of Amodei and Turner brings the total number of Pledge signers in the U.S. House of Representatives to 238 members. There are currently 41 Pledge signers in the U.S. Senate.

“The election of two Taxpayer Protection Pledge signers in the NV-02 and NY-09 special elections yesterday should send a clear message to President Obama that Americans are tired of his unsuccessful, big government tax-and-spend policies. They are looking for a coherent economic policy that supports job creation and fiscal responsibility without the class warfare rhetoric,” said Grover Norquist, president of Americans for Tax Reform.

“I applaud the decisions of Rep.-elect Mark Amodei and Rep.-elect Bob Turner to stand with taxpayers by signing the “no tax” Pledge. Voters have a right to know where candidates stand on the issues before they’re elected. Amodei and Turner showed they are on the side of taxpayers and were chosen to represent taxpayers in Nevada and New York to reverse the President’s failed economic policies,” continued Norquist.

“After the success of Taxpayer Protection Pledge signers in Nevada and New York this week, I encourage all candidates running for elected office to stand on behalf of taxpayers by signing the Taxpayer Protection Pledge today.”

[printable pdf]

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