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John Kartch

Dropped Coverage Subjects More Americans to Obamacare's High Medical Bills Tax


Posted by John Kartch, Ryan Ellis on Wednesday, November 13th, 2013, 2:16 PM PERMALINK


As millions of families are facing cancellation of their health insurance plans due to Obamacare, many will be subject to higher-than-anticipated out of pocket medical costs. Unfortunately this coincides with an Obamacare income tax increase starting in tax year 2013 which makes these higher medical bills more difficult to bear.

The Obamacare law contains 20 new or higher taxes. Even before news of the widespread insurance plan cancellations, IRS data indicates ten million middle class families with high medical expenses would find themselves paying higher income taxes thanks to the so-called Obamacare High Medical Bills Tax, a provision that took effect on Jan. 1, 2013. According to IRS data, the average family subject to this new tax makes just over $53,000 and will face an income tax increase of between $200 - $400 per year.

Background:  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 or health savings accounts. (A full list of qualified expenses can be found in IRS Publication 502.)

Before this tax hike provision took effect, the taxpayer would total all unreimbursed, out-of-pocket medical expenses and 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.

Obamacare's tax hike:  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 subject to the new tax 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.

According to the Joint Tax Committee, this tax increase is scheduled to raise between $2 billion and $3 billion annually.

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.

The number of Americans subject to this tax will undoubtedly rise due to the crush of Obamacare-induced insurance cancellations. President Obama and his Democrat congressional allies have some explaining to do.

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$133 Million for Five Obamacare Enrollees in DC


Posted by John Kartch on Friday, November 8th, 2013, 2:53 PM PERMALINK


According to newly released data from Sens. Orrin Hatch (R-Utah) and Chuck Grassley (R-Iowa), a grand total of five people have enrolled in the Washington, D.C. Obamacare exchange:

CareFirst BlueCross BlueShield: two enrollees from Oct. 1, 2013, through Oct. 30, 2013.
 
Kaiser Permanente: three enrollees from Oct. 1, 2013, through Oct. 31, 2013.
 
UnitedHealthcare: no enrollment data from the exchange as of Nov. 4, 2013.
 
Aetna:  no enrollment data as of Oct. 24, 2013.

How much money was taken from American taxpayers to pay for the D.C. exchange?

$133,573,928

That means American taxpayers shelled out $26.7 million for each DC Obamacare enrollee.

Using official federal grant data from the Centers for Medicare & Medicaid Services, the calculations are as follows:

Amount of Grant

Date Awarded

Purpose

$1,000,000

Sept. 30, 2010

“State planning grant”

$8,200,716

Aug. 12, 2011

“continue and complete current planning and implementation efforts”

$72,985,333

Sept. 27, 2012

“to provide assistance to hire staff and consultants to manage activities related to the creation and first year of operations for testing and enhancement of the Exchange.”

$16,969,089

June 13, 2013

“to develop an IT system that facilitates critical Exchange functions including eligibility, enrollment, and information exchange among individuals, employers, insurance carriers, and state and federal government agencies.”

$34,418,790

Oct. 23, 2013

“evaluate the implementation of the District’s consumer assistance programs, build a quality rating system, and support upgrades to the DC Health Link IT system.”

Total Taxpayer Cost: $133,573,928

Total Enrollees: 5

Taxpayer Cost Per Enrollee:  $26,714,785.60

 

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House Dem: Web Traffic is "lame excuse" for Obamacare Failure


Posted by John Kartch on Thursday, October 24th, 2013, 12:54 PM PERMALINK


Congresswoman Anna Eshoo, a prominent Democrat representing Silicon Valley, had some choice words during today's Energy & Commerce hearings on the failed Obamacare launch.  Addressing Cheryl Campbell of CGI Federal, Rep. Eshoo said:

"I represent Silicon Valley and I find this very hard to follow.  This is the 21st century. It's 2013.  There are thousands of websites that handle concurrent volumes far larger than what healthcare.gov was faced with.  You keep speaking about unexpected volumes,    Ms. Campbell, and that really sticks in my craw.  I have to tell you that. Because as I said, there are thousands of websites that carry far more traffic. So, I think that's really kind of a lame excuse. Amazon and eBay don't crash the week before Christmas, and   ProFlowers doesn't crash on Valentine's Day."

Click the image below to watch the video clip:

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Carney Ducks Obamacare Questions, Walks Out of Press Briefing


Posted by John Kartch on Tuesday, October 22nd, 2013, 3:51 PM PERMALINK


White House spokesman Jay Carney today abruptly walked out of the briefing room after struggling to answer questions related to Obamacare.  As he walks out, frustrated reporters can be heard asking questions, including:

“Have White House officials watched anyone without insurance go through the website, trying to help the situation?”

“Couldn’t we have a [HHS] rep just come to the press briefing?”

Since the Oct. 1 launch of HealthCare.Gov, Carney has repeatedly ducked uncomfortable questions by referring reporters to HHS, where they are met with silence.

Click on the image below to view Carney’s walk-out:

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Timeline of the Obamacare Signup Cover-up


Posted by John Kartch on Tuesday, October 8th, 2013, 4:25 PM PERMALINK


Below is a continuously-updated timeline of Obama administration obfuscation on the question of Obamacare enrollment data:

October 1:

“I would refer you to HHS for details.  Again, this is day one." -White House spokesman Jay Carney, WH Press Briefing

We’re not releasing that information yet." -CMS Administrator Marilyn Tavenner, media conference call

October 3:

“No, we don't have that data." -White House spokesman Jay Carney, WH Press Briefing

October 4:

“You should ask HHS.  I don't have a number.” -White House spokesman Jay Carney, WH Press Briefing

October 5:

“Well, I don’t have the numbers yet." -President Obama, interview with Associated Press

October 6:

"Well, it's obviously not my primary area of responsibility." -Treasury Secretary Jack Lew, Fox News Sunday

October 7:

“We’re going to release those numbers monthly like we do with other medical data. The truth is we don’t have that information now." - White House economic adviser Gene Sperling, Politico Playbook Breakfast

“We will release monthly data when it is available. We have not given an exact date, but it will be after end of month and we will work with states to collect their data to have a good picture of what's happening across the country.” -An unnamed “senior administration official.” As reported by CNN Chief Washington Correspondent Jake Tapper

“We’ll release enrollment data on regular, monthly intervals.”  -White House spokesman Jay Carney, WH Press Briefing

“I’d refer you to CMS and HHS. I’m not sure when that begins. But I’m sure we’ll let you know in plenty of time so you can plan and put it in your calendar.” -White House spokesman Jay Carney, WH Press Briefing, when asked for a specific date on which the data would be made available.

"Fully enrolled? I can't tell you. Because I don't know.” - HHS Secretary Kathleen Sebelius, Comedy Central’s The Daily Show

Americans for Tax Reform has launched a petition drive for taxpayers to send a message to President Obama to immediately release the enrollment data. The petition can be found at http://obamacarecoverup.com/

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Sebelius on The Daily Show


Posted by John Kartch on Tuesday, October 8th, 2013, 9:20 AM PERMALINK


During her Monday night appearance on Comedy Central’s The Daily Show, HHS Secretary Kathleen Sebelius was unable to provide a firm answer to Jon Stewart’s question about federal enrollment numbers for Obamacare:

Jon Stewart: "How many have signed up thus far?"

Sebelius: "Fully enrolled? I can't tell you. Because I don't know. We are taking applications on the web, on the phone. We'll be giving monthly reports but I can tell you, we've had not only lots of web hits, hundreds of thousands of accounts created."

Stewart: "So hundreds of thousands of people have signed up?"

Sebelius: "Of accounts created. Which means that then they're going to go shopping."

Stewart: "What?"

As shown by this timeline compiled by Americans for Tax Reform, the Obama administration has been cagey on the question since enrollment began on Oct. 1.

At the end of Monday’s White House press briefing, spokesman Jay Carney said enrollment reports would be released “monthly” but when pressed on a specific release date, Carney said he didn’t know:

Reporter: “I just wanted to pin something down here. You said that we could expect monthly reports on the enrollments in the Affordable Care Act. So, just so we can plan – will that be on the one-month anniversary which would be the first, or the next business day…”

Carney: “I’d refer you to CMS and HHS. I’m not sure when that begins. But I’m sure we’ll let you know in plenty of time so you can plan and put it in your calendar.”

Americans for Tax Reform has launched a petition drive for taxpayers to send a message to President Obama to immediately release the enrollment data. The petition can be found at http://obamacarecoverup.com/

 

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The Obamacare Signup Cover-up


Posted by John Kartch on Monday, October 7th, 2013, 3:37 PM PERMALINK


White House spokesman Jay Carney today continued the Obama administration’s refusal to release federal Obamacare enrollment data. Carney did say that the data would be released “monthly.” But when asked for a specific date, Carney said “I’d refer you to CMS and HHS. I’m not sure when that begins.”

Below is a timeline of Obama administration obfuscation on the question of enrollment data:

October 1:

“I would refer you to HHS for details.  Again, this is day one.” -White House spokesman Jay Carney, WH Press Briefing

“We’re not releasing that information yet." -CMS Administrator Marilyn Tavenner, media conference call

October 3:

“No, we don't have that data.” -White House spokesman Jay Carney, WH Press Briefing

October 4:

“You should ask HHS.  I don't have a number." -White House spokesman Jay Carney, WH Press Briefing

October 5:

“Well, I don’t have the numbers yet.” -President Obama, interview with Associated Press

October 6:

"Well, it's obviously not my primary area of responsibility." -Treasury Secretary Jack Lew, Fox News Sunday

October 7:

“We’re going to release those numbers monthly like we do with other medical data. The truth is we don’t have that information now.” - White House economic adviser Gene Sperling, Politico Playbook Breakfast

“What I can confirm right now is that people are signing up through federal exchanges. But we’re not going to be able to -- this is an aggregation process – we’re not gonna release data on an hourly, daily, or weekly basis. We’ll follow models that have existed in previous programs including a similar program in Massachusetts, including Medicare Part D, which is the most recent federal example of this kind of thing. We’ll release enrollment data on regular, monthly intervals.”  -White House spokesman Jay Carney, WH Press Briefing

When asked for a specific date on which the data would be made available, Carney said:

"I’d refer you to CMS and HHS. I’m not sure when that begins.”

Americans for Tax Reform president Grover Norquist said: “Americans already know that they have a hard time putting information into the Obamacare enrollment system. Turns out they can’t get any information out of the system either. The system is broken on both ends. Even a company going bankrupt knows how many widgets it sold. Maybe it’s a small amount. But it’s a known number.”

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Navigators Warned: Don't Leave Tax Returns on the Fax Machine


Posted by John Kartch on Monday, September 30th, 2013, 8:33 PM PERMALINK


As Obamacare enrollment begins, the Department of Health and Human Services has a helpful tip for the program's so-called Navigators: “Do not leave documents that contain PII [Personally Identifiable Information] or tax return information on printers and fax machines.”

The warning is contained in Section 2.4.3 of the 207-page Health Insurance Marketplace Navigator Standard Operating Procedures Manual.

The same section asks navigators to “double-check” the fax number before faxing Obamacare enrollee’s tax returns:

“When faxing PII or tax return information, double-check that the recipient’s fax number is correct and that someone is able to pick up the faxed information immediately.”

Because the key components of Obamacare will be enforced by the IRS, navigators will have access to highly sensitive identifying information. The Navigator manual describes Personally Identifiable Information as follows:

  • Identifying information such as consumers’ names, addresses, or SSNs
     
  • Information about consumers’ incomes, personal finances, debts, deductions and exemptions
     
  • Any action taken by the IRS against consumers, such as investigations or penalties
     
  • Any private written agreements (such as a pricing agreement) with the IRS and any background information about these agreements
     
  • Relevant information, even if not found on the return (e.g., expenses)


Additional excerpts from the Navigator Manual:

  • No fake smiles: "Do not pretend to smile, or produce a false smile; these are easy to spot and send the wrong messages." – Section 2.2.1
     
  • Listen: “By not listening you can become very frustrating to consumers.” – Section 2.2.3
     
  • Apologize: “Apologizing when things go wrong demonstrates that you care about consumers and their experiences.” – Section 2.2.4
     
  • "Be Memorable - For the Right Reasons." – Section 2.2.6


The Navigator manual can be found here.

A list of Obamacare taxes, arranged by effective date, can be found here.

Click here for a printable PDF of this press release.

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IRS Watchdog: $67 Million Missing from Obamacare Slush Fund


Posted by John Kartch, Ryan Ellis on Wednesday, September 25th, 2013, 5:10 PM PERMALINK


WASHINGTON, D.C. – The IRS is unable to account for $67 million spent from a slush fund established for Obamacare implementation, according to a Treasury Inspector General for Tax Administration (TIGTA) report released today. 

The “Health Insurance Reform Implementation Fund” (HIRIF) was tucked into Obamacare in order to give the IRS money to enforce the tax provisions of the healthcare law.  The fund, totaling some $1 billion of taxpayer money, was used to roll out enforcement mechanisms for the approximately 50 tax provisions of Obamacare. 

According to the report:  “Specifically, the IRS did not account for or attempt to quantify approximately $67 million [from the slush fund] of indirect ACA costs incurred for Fiscal Years 2010 through 2012.”

The report also found several other abuses of taxpayer funds, including:

Travel abuse:  The report states, “Specifically, we identified 38 IRS employees in two judgmentally selected business units whose travel was charged to the HIRIF in FY 2012, but no portion of their salary and related benefits was charged to the HIRIF.” In short, the IRS was not making sure that employee travel reimbursements had anything to do with the purpose of the fund. This is not the first time that IRS employee travel has created a scandal for the agency.

1,272 IRS Obamacare enforcement agents: The report estimates that total slush fund spending cost taxpayers the equivalent of 1,272 new full time IRS agents.

The IRS requested an additional 859 IRS Obamacare enforcement agents for Fiscal Year 2013: According to the report, “The IRS informed us that it requested $360 million and 859 FTEs for FY 2013 to continue implementation of the ACA. However, the IRS did not receive this requested amount for FY 2013.”

To add insult to injury, the IRS has told the Inspector General that it will comply with the recommendations made in the report; unfortunately, the slush fund has been fully spent, making that promise meaningless.

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Obama on Obamacare: "We did raise taxes on some things."


Posted by John Kartch on Wednesday, September 25th, 2013, 11:57 AM PERMALINK


During his Tuesday remarks at the Clinton Global Initiative, President Obama admitted that his health care law raises taxes:  “So what we did — it’s paid for by a combination of things. We did raise taxes on some things.”

“Some things” is an understatement. Below is just a partial list of Obamacare’s new or higher taxes on Americans:

Starting in tax year 2013:

Obamacare Medical Device Tax:  Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales – even if the company does not earn a profit in a given year.  In addition to killing small business jobs and impacting research and development budgets, this will make everything from pacemakers to artificial hips more expensive.

Obamacare High Medical Bills Tax: Before Obamacare, Americans facing high medical expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI).  Obamacare now imposes a threshold of 10 percent of AGI.  Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. Almost all are middle class. The average taxpayer claiming this deduction earned 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. To learn more about this tax, click here. 

Obamacare Flexible Spending Account Tax:  The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.) Now, a parent looking to sock away extra money to pay for braces will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars. 

Needless to say, this tax will especially impact middle class families.

There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  Nationwide there are several million families with special needs children 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. This Obamacare tax provision will limit the options available to these families.

Obamacare Super Saver Surtax: A new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This tax hike results in the following top tax rates on investment income:

 

Capital Gains

Dividends

Other*

2013+

23.8%

23.8%

43.4%

*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.

Obamacare Medicare Payroll Tax Increase:

 

First $200,000
($250,000 Married)
Employer/Employee

All Remaining Wages
Employer/Employee

Pre-Obamacare

1.45%/1.45%
2.9% self-employed

1.45%/1.45%
2.9% self-employed

Obamacare

1.45%/1.45%
2.9% self-employed

1.45%/2.35%
3.8% self-employed


Starting in tax year 2014:

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

(Delayed by Obama to 2015) Obamacare Employer Mandate Tax:  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).

Obamacare Tax on Health Insurers:  Annual tax on the industry imposed relative to health insurance premiums collected that year.  The tax phases in gradually until 2018.  Fully imposed on firms with $50 million in profits.

Starting in tax year 2018:

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.  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. 

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