Ryan Ellis

NEWS: Comprehensive List of Tax Hikes in<br> Reid-Obama Health Bill UPDATED


Posted by Ryan Ellis on Saturday, December 19th, 2009, 1:46 PM PERMALINK


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List of tax hikes in original Reid bill

Manager's Amendment

CBO Score of Manager’s Amendment

JCT Score of Manager’s Amendment

(Page numbers reference ORIGINAL REID-OBAMA BILL unless noted):

Individual Mandate Tax (Page 324/Sec. 1501/$15 bil/Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following (page 71 of manager’s amendment updates Reid bill):

  Single 2 People 3+ People
2014 $495/0.5% AGI $990/0.5% AGI $1485/0.5%/AGI
2015 $495/1.0% AGI $990/1.0% AGI $1485/1.0%/AGI
2016+ $495/2.0% AGI $990/2.0% AGI $1485/2.0%/AGI

 

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS).

Employer Mandate Tax (Page 348/Sec. 1513/$28 bil/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 $750 for all full-time employees.  Applies to all employers with 50 or more employees.

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).

Excise Tax on Comprehensive Health Insurance Plans (Page 1979/Sec. 9001/$149.1 bil/Jan 2011): Starting in 2013, new 40 percent excise tax on “Cadillac” health insurance plans ($8500 single/$23,000 family).  Higher threshold ($9850 single/$26,000 family) for early retirees and high-risk professions.  CPI +1 percentage point indexed.  Longshoremen have been exempted (page 362 of the manager’s amendment)

From 2013-2015, the 17 highest-cost states are 120% of this level. 

Employer Reporting of Insurance on W-2 (Page 1996/Sec. 9002/Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.

Medicine Cabinet Tax (Page 1997/Sec. 9003/$5 bil/Jan 2011): No longer allowable to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin)

HSA Withdrawal Tax Hike (Page 1998/Sec. 9004/$1.3 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

FSA Cap (Page 1999/Sec. 9005/$13.3 bil/Jan 2011): Imposes cap on FSAs of $2500 (now unlimited).  Indexed to inflation after 2011 (added on page 363 of manager’s amendment)

Corporate 1099-MISC Information Reporting (Page 1999/Sec. 9006/$17.1 bil/Jan 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers

Excise Tax on Charitable Hospitals (page 2001/Sec. 9007/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 (updated on page 364 of manager’s amendment).

Tax on Innovator Drug Companies (Page 2010/Sec. 9008/ $22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Medical Device Manufacturers (Page 2020/Sec. 9009/$19.2 bil/Jan 2010): $2 billion annual tax on the industry imposed relative to shares of sales made that year.  Exempts items retailing for <$100.  Rises to $3 billion annually in 2017 (updated by page 364 of manager’s amendment).

Tax on Health Insurers (Page 2026/Sec. 9010/$59.6 bil/Jan 2011): $10 billion annual tax on the industry imposed relative to health insurance premiums collected that year.  Phases in gradually until 2017.  Fully-imposed on firms with $50 million in profits (updated on page 365 of manager’s amendment)

Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Page 2034/Sec. 9012/$5.4 bil/Jan 2011)

Raise "Haircut" for Medical Itemized Deduction from 7.5% to 10% of AGI (Page 2034/Sec. 9013/$15.2 bil/Jan 2013): Waived for 65+ taxpayers in 2013-2016 only

$500,000 Annual Executive Compensation Limit for Health Insurance Executives (Page 2035/Sec. 9014/$0.6 bil/Jan 2013)

Hike in Medicare Payroll Tax (Page 2040/Sec. 9015/$86.8 bil/Jan 2013): Current law and changes:

 

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

All Remaining Wages
Employer/Employee
Current Law 1.45%/1.45%
2.9% self-employed
1.45%/1.45%
2.9% self-employed
Reid-Obama Tax Hike 1.45%/1.45%
2.9% self-employed
1.45%/2.35%
3.8% self-employed

 
The 0.9% new rate addition is not deductible for the self-employment tax adjustment.  Updated by page 372 of manager’s amendment.

Blue Cross/Blue Shield Tax Hike (Page 2044/Sec. 9016/$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

STRICKEN: Tax on Cosmetic Medical Procedures (Page 2045/Sec. 9017/$5.8 bil/Jan 2010): New 5% excise tax on elective cosmetic surgery to be paid by the surgery patient.

REPLACED BY: Tax on Indoor Tanning Services (Page 373 of Manager’s amendment/$2.7 billion/July 1, 2010): New 10% excise tax on indoor tanning salons

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UPDATED: List of Tax Changes in<br> Reid Manager's Amendment


Posted by Ryan Ellis on Saturday, December 19th, 2009, 9:54 AM PERMALINK


Full bill is here.  Page references are below.

PDF Version

(Page numbers below reference manager amendment.  These should be read in context of original Reid bill)

Individual mandate surtax (page 71) Assuming a bronze-level plan is more expensive (a near-certainty), this penalty is now the greater of a flat dollar amount ($495 single, $990 two persons, $1485 three persons or more), or a percentage of “household income” (0.5% 2014, 1.0 percent 2015, 2.0 percent 2016 and afterwards)

Longshoremen have been exempted (page 362) from the 40% “Cadillac plan” excise tax which will be assessed on comprehensive health insurance plans

FSA cap (page 363) the $2500 cap on flex spending accounts is now indexed for inflation starting in 2012

Tax on charitable hospitals (page 364) made less onerous by changing calculation input from the lowest amount charged, to the amount generally billed by a hospital

Medical device manufacturer's tax (page 364) now starts in 2010 and raises $2 billion per year ($3 billion starting in 2017)

Insurance company profit surtax (page 365) now fully implemented on companies with $50 million in profits; now up to $10 billion in total taxes, assessed on a pro-rated basis to insurance companies based on profits; exempts the non-profit insurance plans

Medicare payroll tax (Page 372) shall now rise from 2.9 percent to 3.8 percent for wages and self-employment income above $200,000 ($250,000 married).  Current 2.9 percent rate retained for wages and self-employment income below this amount

10 percent tax on the cost of indoor tanning services (page 373) This replaces the “botax” cosmetic surgery tax, which has been stricken

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ATR Will Rate All Remaining Votes on<br> Senate Health Bill This Year


Posted by Ryan Ellis on Friday, December 18th, 2009, 12:54 PM PERMALINK


Americans for Tax Reform will be key-voting all the anticipated remaining votes on the Senate healthcare bill.  This includes all cloture votes, as well as a potential vote on final passage.  ATR will score negatively a vote that cuts off debate on this bill, and will score negatively a vote in favor of this bill’s passage.

Assuming the Obama-Reid health bill as modified contains the same tax language as the original version, there are 18 separate tax increases totaling $858 billion over the next decade.  There will be tax increases on those failing to get “qualifying health insurance,” employers not offering insurance, comprehensive insurance plans, wages, medical device manufacturers, and anyone with a health account like an FSA or HSA.  Many of these tax hikes fall directly on households making less than $250,000 per year, in total violation of President Obama’s oft-repeated campaign promise not to raise “any form” of taxes on these families and small businesses.

In a time of deep recession, the economy cannot afford the new tax increases in this bill.  It should be vigorously opposed for this and many other reasons.

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ATR Will Rate A Vote In Favor Of<br> Crapo Motion on Working Family Tax Hikes


Posted by Ryan Ellis on Tuesday, December 15th, 2009, 12:58 PM PERMALINK


This afternoon, the United States Senate will be casting a series of votes on the Reid-Obama government health bill.  One of these motions is sponsored by Senator Mike Crapo (R-Id.).  His motion would specify that “no provision” in the legislation shall result in an increase in federal tax liability for families with incomes under $250,000 annually or individuals with incomes under $200,000.

The language of this motion is nothing more than putting into the bill what President Obama and many Congressional Democrats promised over and over again in 2008 to get elected: namely, that families making less than $250,000 would not see “any form” of tax increase.

The Reid-Obama government health bill contains many tax hikes on families making less than $250,000 per year.  To name but a few, it imposes a new tax on anyone not purchasing qualifying health insurance, it taxes anyone with an HSA or FSA who wants to use tax-free dollars to purchase over-the-counter medicines, and it taxes families with special needs children who use FSAs to pay for special-needs tuition.

A list of all taxes in the bill that violate President Obama’s pledge and a timeline of this oft-repeated promise can be found on ATR’s website.

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ATR Opposes Gregg-Conrad<br> Bipartisan Tax/Spending Commission Bill


Posted by Ryan Ellis on Wednesday, December 9th, 2009, 1:24 PM PERMALINK


Americans for Tax Reform President Grover Norquist sent the following letter today to Senators Judd Gregg (R-N.H.) and Kent Conrad (D-N.D.):

***

I write to express in the strongest possible terms Americans for Tax Reform’s opposition to your “Bipartisan Task Force for Responsible Fiscal Action Act of 2009.”  As written, it would lead to a guaranteed tax increase.

The bill establishes an eighteen-member task force comprised of ten Democrat and eight Republican Congressmen, Senators, and Administration officials.  A report from the commission would need to gather fourteen votes in order to make an expedited recommendation to both bodies.  The recommendation would only pass with a supermajority vote in each chamber.

Despite the appearance of protection for taxpayers, this commission would guarantee a net tax increase be in its proposal.  Every Democrat on the commission would insist on tax increases to “balance” spending cuts in the recommendation.  There is no conceivable scenario whereby the commission would issue a report that does not contain tax hikes.  Therefore, this commission is unacceptable from a taxpayer perspective.

In order to make this commission acceptable from a taxpayer perspective, language must be included that explicitly removes tax increases and/or new taxes from commission consideration.

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ATR Opposes H.R. 4173, <br>Tax Hikes on Financial Services


Posted by Ryan Ellis on Tuesday, December 8th, 2009, 6:55 PM PERMALINK


ATR President Grover Norquist sent the following letter today to House Financial Services Chairman Barney Frank (D-Mass.):

***

Americans for Tax Reform is opposed to H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009.”  Besides raising the cost of government with onerous new regulations on the financial services sector, H.R. 4173 is a net tax increase.

According to the Congressional Budget Office and the Joint Tax Committee, net tax revenues would increase by $4.9 billion over the 2009-2019 budget window.  These tax hikes are the result of new fees assessed on the financial services sector in order to pay for the new regulations on that same sector.

Increasing taxes and regulations on financial services companies will only result in fewer and more expensive financial services offered to the American people.  The old maxim, “if you want less of something, tax it more” certainly applies here (and one might also insert “regulate” instead of “tax”). 

Raising taxes on vital services needed by everyone—at least everyone who owns a home, has a credit card, or has opened an IRA—is foolish public policy.

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ATR Expresses Disappointment in<br> H.R. 4213, the "Tax Extenders Act of 2009"


Posted by Ryan Ellis on Tuesday, December 8th, 2009, 6:30 PM PERMALINK


Americans for Tax Reform president Grover Norquist today sent the following letter to House Ways and Means Chairman Charlie Rangel (D-N.Y.):

***

On behalf of Americans for Tax Reform, I wanted to express my disappointment in H.R. 4213, the “Tax Extenders Act of 2009.”  In particular, this bill continues a bad tax practice which has been characteristic of your reign as Chairman of Ways and Means: namely, temporarily extending current tax law and “paying for it” with new, permanent tax increases.

Every year or two, Congress “extends” tax provisions which are scheduled to expire.  Congress only lets these provisions threaten to expire to create a “must-pass” bill.  This bill often becomes a vehicle for controversial legislation.  While unseemly, this “train leaving the station” tactic has been used by many Congresses controlled by both Republicans and Democrats.

What makes this tactic distasteful in recent years has been the Democrat leadership’s attempt to legislate permanent new tax hikes merely to extend current tax law.  The new tax hikes are permanent, while the extended tax law is only one or two years.  Over time, the accumulation of these new and permanent tax hikes results in very large increases in the overall net tax burden.

H.R. 4213 has one new tax increase that will hit hardest on charities, university endowments, and defined benefit pension plans.  The bill taxes capital gains earned by investment partnership managers not as capital gains (which is what they are), but as ordinary income.  This raises the tax rate on this “carried interest” in an investment partnership from 15 percent today to 35 percent in 2010 and 39.6 percent in 2011.  Managers of investment partnerships will demand a bigger profit share to compensate for these higher taxes.  That reduces the profit remaining for the limited partners—who are most often charities, university endowments, and defined benefit pension plans.

This bill is anti-taxpayer.  Requiring taxpayers to give Uncle Sam more money just to keep current tax rules in place is akin to paying the mob not to smash your windows in.

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Obama Tax Panel to Create "Public Option"<br> Boondoggle in Tax Return Preparation


Posted by Ryan Ellis on Monday, December 7th, 2009, 5:36 PM PERMALINK


There's a lot of talk in Washington these days about a so-called "public option" in healthcare.  It would be a bad thing, because it would create a taxpayer-subsidized competitor to private sector insurance companies.  Most people suspect that, over time, this subsidization would incent people to enroll with the "public option" over private providers.

The "public option," therefore, is simply single-payer health insurance with an additional step to make it less obvious.

It might surprise you that the Obama Administration is looking to do something similar with, of all things, tax preparation.  Former Federal Reserve Chairman Paul Volcker is heading up a commission to reform both the tax code and tax administration.  The final report was due out this month, but has been delayed until after the holidays.

It's widely expected that a new "public option" for tax preparation will be included in the recommendations.  Like its health insurance cousin, a tax-prep public plan would eventually cripple the private sector tax preparation industry.

Why should you care?  Well, if the IRS (or another government agency) is preparing your tax return, all the many gray areas of a return would be ruled in favor of the government (that is, in favor of higher taxes).  Think of it like a football officiating crew hired by the home team.  Would you want to play on that field?

As we get closer to the release date, ATR will have a "Fact of the Day" on why private tax preparation is good for taxpayers, and why a government-run tax prep regime would be a stealth tax increase.

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Comprehensive List of Marriage Penalties<br> In House and Senate Healthcare Bill


Posted by Ryan Ellis on Monday, December 7th, 2009, 4:30 PM PERMALINK


It's not often you see good, solid policy analysis coming out of a Congressional campaign.  A happy and notable exception is this study by Allen Quist, a candidate for Congress in the first district of Minnesota.

He's put together a comprehensive list of all the marriage penalties in the Senate health bill.  You can read the full list on his website.  Suffice it to say, there is a huge incentive in these bills to co-habitate rather than get married.  There is also a huge incentive to try to make less than 400 percent of the federal poverty line.

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