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John Kartch

Today: Five-Year Anniversary of President Obama's Shattered Middle-Class Tax Pledge


Posted by John Kartch on Thursday, September 12th, 2013, 1:33 PM PERMALINK


Speaking in Dover, New Hampshire on Sept. 12, 2008, then-candidate 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]

But Obama’s “firm pledge” to the American people was thrown out the window when he signed Obamacare into law. At least seven of the 20 new or higher taxes in Obamacare directly hit families making less than $250,000:

1. 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."

Americans liable for the tax will be forced to 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. 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. 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.

 

3. 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.

 

4. Obamacare Medicine Cabinet Tax. Thanks to Obamacare, since January 2011 Americans have not been able to purchase non-prescription, over-the-counter medicines from their Flexible Spending Accounts or Health Savings Accounts. Families often rely on over-the-counter medicines to get themselves through the colds, fevers, and aches and pains of daily family life.

 

5. 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. 

6. Obamacare 10 Percent Excise Tax on Indoor Tanning: This Obamacare tax increase has the distinction of being the first to go into effect (July 2010). Slipped into the bill by Sen. Harry Reid (D-Nev.) behind closed doors in the middle of the night, this tax hike replaced the planned Obamacare "Botax" on cosmetic surgery. This petty, burdensome, nanny-state tax affects both the business owner and the end user. Making matters worse: According to aTreasury Inspector General for Tax Administration report, the Obama IRS didn't bother to issue compliance guidelines until three quarterly filing deadlines had passed: "By the time [IRS] notices were issued, tanning excise tax returns had been due for three quarters." This is yet another sign that the Obama administration is ill-prepared for Obamacare implementation.

 

7. Obamacare HSA Withdrawal Tax Hike: In effect since 2011, this Obamacare levy increases the 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.

 

None of the above Obamacare tax increases contain any exemption whatsoever for families making less than $250,000 per year: All are violations of Obama’s “firm pledge.”

 

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Internet Tax Freedom Forever - Taking it to the House


Posted by John Kartch on Thursday, September 12th, 2013, 12:30 PM PERMALINK


Today Chairman of House Judiciary Committee Rep. Bob Goodlatte (R-Va.) and Rep. Anna Eshoo (D – Calif.) introduced the Permanent Internet Tax Freedom Act (PITFA) along with Rep. Spencer Bachus (R-Ala.), Rep. Steve Cohen (D-Tenn.) and Rep. Steve Chabot (R-Ohio).  PITFA permanently bans taxes on Internet access, and bars multiple and discriminatory taxes on electronic commerce.  

The current law banning state taxes on Internet access and discriminatory taxes on electronic commerce was first enacted on a temporary basis in 1997 and has been reauthorized three times.  That law currently know as the Internet Tax Moratorium is scheduled to expire in November 2014. PITFA would make the Internet Tax Moratorium, which bans taxes on Internet access and bans discriminatory taxes on e-commerce, permanent with one important change.  

The original iteration of the law grandfathered in preexisting Internet taxes with the intent of a gradual phase out.  Because PITFA eliminates the grandfathered Internet connection taxes, many Americans will see their broadband service bills decrease.

PITFA would also ensure the continued growth of online commerce by forever barring states from taxing online purchases at a higher rate than the general sales tax rate.

The companion Senate version of PIFTA, the Internet Tax Freedom Forever Act, was introduced shortly before the August recess by Sen.John Thune (R-S.D.) and Sen. Ron Wyden (D-Ore.).

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ATR Marks the 28th Anniversary of its Kickoff Event with President Reagan


Posted by John Kartch on Thursday, September 12th, 2013, 11:19 AM PERMALINK


Highlights of the Tax Reform Act of 1986 include:

  • Lowered the top marginal individual income tax rate from 50 percent to 28 percent.
  • Lowered the corporate income tax rate from 46 percent to 34 percent.
  • Reduced the number of tax brackets from fourteen to two.
  • Increased the standard deduction and personal exemption amounts such that income earned in poverty faced no taxation.
  • Remains the most sweeping simplification of the modern history of the income tax.Photo of President Ronald Reagan Signing ATR's Petition in 1985

In this September 12, 1985 photo taken in Tampa, Florida, President Ronald Reagan signs an Americans for Tax Reform petition to the House Ways & Means Committee urging the passage of what became the Tax Reform Act of 1986.

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IRS: Compliance Burden for Obamacare Individual Mandate Tax Totals 7.5 Million Hours Each Year


Posted by John Kartch on Tuesday, August 27th, 2013, 1:39 PM PERMALINK


The IRS today released its final rule on the Obamacare individual mandate non-compliance penalty tax. Key numbers for taxpayers:

7.5 million hours: Taxpayers will be forced to spend a total of 7.5 million hours each year complying with the new tax.

30 Minutes: Taxpayers will be forced to spend up to 30 additional minutes filling out paperwork each year, just for this one new tax.

63: The number of times the final rule uses the Orwellian term “Shared Responsibility Payments” to describe what is actually a tax.

Americans for Tax Reform takes a look back at well-known “Shared Responsibility Payments” quotations throughout history:

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Obamacare Advocates Hurl Desperate Hail Mary Pass to NFL


Posted by John Kartch on Wednesday, August 14th, 2013, 10:06 AM PERMALINK


A month after big labor front group "Moms Rising" (check out their policy priorities and lack of mailing address) began circulating a petition to have the NFL reconsider its decision to not push Obamacare on its fans, the group now has "thousands" of signatures that they are dropping off at the league's New York City headquarters today at 11:00 a.m.  

 

According to the  U.S. Department of Labor, women make approximately 80 percent of the healthcare decisions for families. With that in mind, Ryan Ellis, Director of Tax Policy for Americans for Tax Reform, points out in his 2012 Daily Caller piece, "The Obamacare law contains 20 new or higher taxes. Many of these taxes fall on basic healthcare decisions. Thus, the Obamacare tax hikes on healthcare will disproportionately burden women." Two of the most detrimental tax hikes contained in the controversial healthcare law especially harm  families with special needs children and families facing high out-of-pocket medical expenses.

 

 "Moms Rising" might consider joining their fellow union groups in noting the harmful effects of the healthcare law. In a joint letter to Congress signed by Jimmy Hoffa (President, Teamsters), Joseph Hansen (President, The United Food and Commercial Workers International Union), and D. Taylor (President, Union of Needletrades, Industrial, and Textile Employees- Hotel Employees and Restaurant Employees International Union), the leaders of three of the largest U.S. unions warned Democratic leaders the President's healthcare law will "destroy the foundation of the 40 hour work week that is the backbone of the American middle class." They went further to say:
 

 "The unintended consequences of the ACA are severe... Perverse incentives are causing nightmare scenarios. First, the law creates an incentive for employers to keep employees' work hours below 30 hours a week. Numerous employers have begun to cut workers' hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits."

 

Even professional athletes from the major sports leagues HHS and the Obama administration want to use to promote Obamacare will incur higher tax rates. Promoting Obamacare would be a personal foul against the fans and taxpayers who tune in to watch their favorite team and athletes each season.

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Obamacare Tax Dollars Wasted on Custom Sunscreen, Concert Port-a-Potties, and Airplane Beach Banners


Posted by John Kartch on Thursday, July 11th, 2013, 11:42 AM PERMALINK


As reported in the Washington Post, taxpayer dollars are being used to finance several questionable advertisements for the unpopular law:

“In Connecticut, selling Obamacare involves airplanes flying banners across beaches. Oregon may reel in hipsters with branded coffee cups for their lattes. And in neighboring Washington, the effort could get quite intimate: The state is interested in sponsoring portable toilets at concerts.”

--

“Access Health CT, Connecticut’s marketplace, plans to head to the beach this summer to promote its new insurance marketplace. Officials will hand out sunscreen customized with a ‘get covered’ slogan and hire an airplane to fly over beaches with a banner that advertises the new agency.”

--

“We’ve talked about everything we could use, even whether we could do some branding on porta-potties,” he said. “I want to sponsor charging stations, too. Talk about a captive audience. They’re standing there, charging their iPhones.”

The full article can be read here.

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Taxpayers Urge Ohio Senate to Oppose Hotel Occupancy Tax Hike (HB 59)


Posted by John Kartch on Friday, May 24th, 2013, 5:27 PM PERMALINK


ATR president Grover Norquist sent the following letter to the state Senate:

I write urging your strong opposition to provisions in the House-passed version of HB 59 that would expand hotel occupancy taxes beyond their appropriate scope by applying them to services provided by online travel companies. These provisions in question, found on lines 105728 through 105744 and 106825, would require municipalities to levy lodging taxes based on an amount that includes “the intermediary’s services” and would change the definition of “substantial nexus” for state sales and use tax purposes to include “hotel intermediaries.”  Such a new tax – a tax increase - on tourism is highly discriminatory and unconstitutional.

When a consumer books a hotel room at an online travel site, the room rent and taxes owed are forwarded to the hotel and locality. A fee for service is included in that transaction and retained by the travel site. HB 59 would unjustly apply the high and discriminatory hotel tax to the travel company’s service fee, which is well outside the scope of hotel occupancy taxes. Such fees are already taxed as income and would result in excessive double taxation

This tax will also place an undue burden on interstate Internet commerce and expressly violate the Dormant Commerce Clause of the U.S. Constitution. Well-established legal precedent requires companies to have a physical nexus within a state or locality in order for that jurisdiction to compel businesses to collect and remit taxes. This is a presence that Internet travel companies simply do not have.  For this reason, at least nine state and federal courts have already ruled against such taxes across the country; however; this tax provision ignores judicial president and claims that providing this service establishes physical nexus.  It clearly does not.

Additionally, the effort disregards the 1998 Internet Tax Freedom Act, which specifically prevents states and localities from applying discriminatory taxes – such as hotel taxes – to electronic commerce.

Online travel websites allow consumers to more easily find and make travel plans, promoting tourism and economic growth in Ohio.  This tax would discourage such tourism, negatively impacting the economy and jobs across the entire state of Ohio.

For the reasons given above, I urge you to oppose HB 59 and any efforts to raise taxes on tourism or the Internet. If you have any questions, please contact Katie McAuliffe at kmcauliffe@atr.org

View PDF here.

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Four Early Clues to the Obama Administration's Disdain for the Tea Party


Posted by John Kartch on Thursday, May 16th, 2013, 6:00 AM PERMALINK


A look back to the early days of the Obama administration reveals a consistent disdain for the tea party movement from the start:

April 19, 2009:  Asked about the nationwide April 15 tea parties on Face the Nation, White House senior advisor David Axelrod said: “I think any time you have severe economic conditions there is always an element of disaffection that can mutate into something that's unhealthy.”

April 29, 2009:  Speaking at a town hall meeting in St. Louis, Obama directly addressed tea party attendees:  "Those of you who are watching certain news channels on which I'm not very popular, and you see folks waving tea bags around, let me just remind them that I am happy to have a serious conversation about how we are going to cut our health care costs down over the long term, how we are going to stabilize Social Security…But let's not play games and pretend that the reason [for the deficit] is because of the Recovery Act."

August 4, 2009: Asked by reporters about the emerging tea party movement, White House spokesman Robert Gibbs said:  “I hope people will take a jaundiced eye to what is clearly the Astro Turf nature of so-called grassroots lobbying”.  Questioned further, Gibbs said:  “This is manufactured anger.”

Sept. 13, 2009: During an interview on Face the Nation, when asked what his message was to those at the previous day’s "9/12" rallies, David Axelrod said:  “My message to them is they’re wrong.”

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Obamacare Flashback: IRS "determining who to audit and who not to"


Posted by John Kartch on Wednesday, May 15th, 2013, 11:28 AM PERMALINK


The IRS has found itself in a lot of hot water in Washington this week largely due to a stunning report from the Treasury Inspector General for Tax Administration (TIGTA). But this isn’t the first time TIGTA has called out the IRS for inappropriate actions. On Wednesday, March 5, 2013, TIGTA official J. Russell George tesified before the House Appropriations Committee. As part of his exchange with lawmakers, Mr. George was asked about the tax implications of Obamacare.

As reported by POLITICO's Rachael Bade:

“It is unprecedented in recent history, the amount of responsibility the IRS is being given in an area that most people don’t think of as an IRS function,” George said. Americans, he added, will have more questions about their taxes because of health care penalties or credits, flooding already busy call-in and walk-in tax help centers. “This is going to lead to problems, sir.”

And these resource issues are bound to spill over into tax fraud enforcement, where the IRS will have to do a cost-benefit analysis when determining which tax fraudsters to chase.

“They have to determine what enforcement mechanisms they’ll employ … how they go about determining who to audit and who not to,” George said.

You might already know about the twenty new or higher taxes in Obamacare.  What you might not know is that the non-partisan Government Accountability Office (GAO) says that the IRS has 47 new taxes and regulations to administer in overseeing Obamacare. 

The IRS is not capable of doing all this, as the quotation above confirms. 
Here is the list:

 
  1. Prohibits group health plans from discriminating in favor of highly compensated individuals.
  2. Establishes a temporary reinsurance program to provide reimbursement for a portion of the cost of providing health insurance coverage to early retirees.
  3. Imposes a penalty on health plans identified in an annual Department of Health and Human Services (HHS) penalty fee report, which is to be collected by the Financial Management Service after notice by the Department of the Treasury (Treasury).
  4. Requires state exchanges to send to Treasury a list of the individuals exempt from having minimum essential coverage, those eligible for the premium assistance tax credit, and those who notified the exchange of change in employer or who ceased coverage of a qualified health plan.
  5. Provides tax exemption for nonprofit health insurance companies receiving federal start-up grants or loans to provide insurance to individuals and small groups.
  6. Provides tax exemption for entities providing reinsurance for individual policies during first 3 years of state exchanges.
  7. Provides premium assistance refundable tax credits for applicable taxpayers who purchase insurance through a state exchange, paid directly to the insurance plans monthly or to individuals who pay out-of-pocket at the end of the taxable year.
  8. Provides a cost-sharing subsidy for applicable taxpayers to reduce annual out-of-pocket deductibles.
  9. Outlines the procedures for determining eligibility for exchange participation, premium tax credits and reduced cost-sharing, and individual responsibility exemptions.
  10. Allows advance determinations and payment of premium tax credits and cost-sharing reductions.
  11. Authorizes IRS to disclose certain taxpayer information to HHS for purposes of determining eligibility for premium tax credit, cost-sharing subsidy, or state programs including Medicaid, including (1) taxpayer identity; (2) the filing status of such taxpayer; (3) the modified adjusted gross income of taxpayer, spouse, or dependents; and (4) tax year of information.
  12. Provides nonrefundable tax credits for qualified small employers (no more than 25 full-time equivalents (FTE) with annual wages averaging no more than $50,000) for contributions made on behalf of its employees for premiums for qualified health plans.
  13. Requires all U.S. citizens and legal residents and their dependents to maintain minimum essential insurance coverage unless exempted starting in 2014 and imposes a fine on those failing to maintain such coverage.
  14. Requires every person who provides minimum essential coverage to file an information return with the insured individuals and with IRS.
  15. Imposes a penalty on large employers (50+ FTEs) who (1) do not offer coverage for all of their full-time employees, offer unaffordable minimum essential coverage, or offer plans with high out-of-pocket costs and (2) have at least one full-time employee certified as having purchased health insurance through a state exchange and was eligible for a tax credit or subsidy.
  16.  Requires information reporting of health insurance coverage information by large employers (subject to IRC 4980H) and certain other employers.
  17. Offers tax exclusion for reimbursement of premiums for small-group exchange participating health plans offered by small employers to all full-time employees as part of a cafeteria plan.
  18.  Subjects new group health plans to certain Public Health Service Act requirements and imposes the excise tax on plans that fail to meet those requirements. (Conforming amendment)
  19.  Authorizes IRS to disclose certain taxpayer information to the Social Security Administration (SSA) regarding reduction in the subsidy for Medicare Part D for high-income beneficiaries. (Conforming amendment)
  20.  Requires the independent institute partnering with the National Academy of Sciences (NAS) to implement a key national indicator system to be a nonprofit entity under section 501(c)(3).
  21. . Imposes a fee through 2019 on specified health insurance policies and applicable self-insured health plans to fund the Patient-Centered Outcomes Research Trust Fund to be used for comparative effectiveness research.
  22.  Imposes a 40 percent excise tax on high cost employer-sponsored health insurance coverage on the aggregate value of certain benefits that exceeds the threshold amount.
  23.  Requires employers to disclose the value of the employee’s health insurance coverage sponsored by the employer on the annual Form W-2.
  24.  Repeals the tax exclusion for over-the-counter medicines under a Health Flexible Spending Arrangement (FSA), Health Reimbursement Arrangement (HRA), Health Savings Account (HSA), or Archer Medical Savings Account (MSA), unless the medicine is prescribed by a physician.
  25.  Increases tax on distributions from HSAs and Archer MSAs not used for medical expenses.
  26.  Limits health FSAs under cafeteria plans to a maximum of $2,500 adjusted for inflation.
  27.  Imposes additional reporting requirements for charitable hospitals to qualify as tax-exempt under IRC 501(c)(3) and requires hospitals to conduct a community health needs assessment at least once every 3 years and to adopt a financial assistance policy and policy relating to emergency medical care.
  28.  Imposes a fee on each covered entity engaged in the business of manufacturing or importing branded prescription drugs.
  29.  Imposes an annual fee on any entity that provides health insurance for any U.S. health risk with net premiums written during the calendar year that exceed $25 million.
  30.  Allows the deduction for retiree prescription drug expenses only after the deduction amount is reduced by the amount of the excludable subsidy payments received.
  31. Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5 percent of Adjusted Gross Income (AGI) to 10 percent of AGA (unless taxpayer turns 65 during 2013-2016 and then threshold remains at 7.5 percent).
  32.  Denies the business expenses deductions for wage payments made to individuals for services performed for certain health insurance providers if the payment exceeds $500,000.
  33. Imposes an additional Hospital Insurance (Medicare) Tax of 0.9 percent on wages over $200,000 for individuals and over $250,000 for couples filing jointly.
  34.  Limits eligibility for deductions under section 833 (treatment of Blue Cross and Blue Shield) unless the organizations meet a medical loss ratio standard of at least 85 percent for the taxable year.
  35.  Allows an exclusion from gross income for the value of specified Indian tribe health care benefits.
  36.  Allows small businesses to offer simple cafeteria plans—plans that increase employees’ health benefit options without the nondiscrimination requirements of regular cafeteria plans.
  37.  Establishes a 50 percent nonrefundable investment tax credit for qualified therapeutic discovery projects.
  38.  Requires employers to provide free choice vouchers to certain employees who contribute over 8 percent but less than 9.8 percent of their household income to the employer’s insurance plan to be used by employees to purchase health insurance though the exchange.
  39.  Imposes a tax on any indoor tanning service equal to 10 percent of amount paid for service.
  40.  Excludes from gross income amounts received by a taxpayer under any state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health care services in underserved or health professional shortage areas.
  41.  Increases the maximum adoption tax credit and the maximum exclusion for employer-provided adoption assistance for 2010 and 2011 to $13,170 per eligible child.
  42.  Extends the exclusion from gross income for reimbursements for medical expenses under an employer-provided accident or health plan to employees’ children under 27 years.
  43.  Imposes an unearned income Medicare contribution tax of 3.8 percent on individuals, estates, and trusts on the lesser of net investment income or the excess of modified adjusted gross income (AGI + foreign earned income) over a threshold of $200,000 (individual) or $250,000 (joint).
  44.  Imposes a tax of 2.3 percent on the sale price of any taxable medical device on the manufacturer, producer, or importer
  45.  Amends the cellulosic biofuel producer credit (nonrefundable tax credit of about $1.01 for each gallon of qualified fuel production of the producer) to exclude fuels with significant water, sediment, or ash content (such as black liquor).
  1.  Clarifies and enhances the applications of the economic substance doctrine and imposes penalties for underpayments attributable to transactions lacking economic substance.
  2. Increases the required payment of corporate estimated tax due in the third quarter of 2014 by 15.75 percent for corporations with more than $1 billion in assets, and reduces the next payment due by the same amount.

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List of Upcoming Obamacare Tax Hikes


Posted by John Kartch on Tuesday, May 14th, 2013, 2:47 PM PERMALINK


The nation’s Capital is obsessed with the recent raft of IRS political scandals, crippling the little confidence the American people had in that agency. As the U.S. House prepares to vote on Obamacare repeal this week, taxpayers are reminded that some of the worst of the Obamacare tax increases begin to be implemented by the IRS this year and next:

Starting in tax year 2013:

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 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 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 Surtax on Investment Income:  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%

43.4%

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. (Bill: Reconciliation Act; Page: 87-93)

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

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.

View PDF here.

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