Ryan Ellis

Don't Forget About the "Other" Mandate<br> Tax: H.R. 3200 Taxes the Uninsured


Posted by Ryan Ellis on Monday, September 21st, 2009, 2:55 PM PERMALINK


There's a lot in the news today about President Obama's seeming ignorance of the $3800 excise tax contained in the Baucus-Obama healthcare plan.

You might have forgotten that there is another.

In H.R. 3200 (the Pelosi-Rangel-Obama version of reform), there is an income surtax on the uninsured of up to 2.5% of adjusted gross income, or the average premium cost, whichever is less.  So, a family making $70,000 and choosing not to insure would face a tax hike of $1750.

What makes the Baucus-Obama tax of $3800 on this same family so odd is that Democrats in Washington seemed to have learned NOTHING from the August recess town halls or the 9/12 rally on Washington.  Instead of scrapping this unpopular tax, they've doubled it!

More from Americans for Tax Reform

Top Comments


There's More Than One Tax Hike<br> In the Baucus-Obama Health Plan


Posted by Ryan Ellis on Monday, September 21st, 2009, 11:19 AM PERMALINK


Yesterday, President Obama obstinately refused to acknowledge what is obvious to anyone who reads the Baucus-Obama government healthcare bill: it has a massive tax increase ($750 to $3800) on families who choose not to enroll in Obamacare.  From Page 29:

“Excise Tax.  The consequence for not maintaining insurance would be an excise tax... the excise tax would be assessed through the tax code and applied as an additional amount of federal tax owed.”

But those are not the only new taxes in the Baucus-Obama plan:

  • Employer Mandate Tax.  $400 per employee if health coverage is not offered.  Note: this is a huge incentive to drop coverage, as $400 is much less than the average plan cost of $11,000 for families or $5000 for singles (Source: AHIP)
  • Backdoor Death of HSAs.  By requiring that all plans (besides the few that are grandfathered) provided first-dollar coverage for most services, there would be no HSA-qualifying plans available from the Massachusetts-like exchanges
  • Excise Tax on High-Cost Health Plans.  New 35% excise tax on health insurance plans to the extent they exceed $21000 in cost ($8000 single)
  • Report Employer Health Spending on W-2. 
  • Cap Flex-Spending Account (FSA) Contributions at $2000. Currently unlimited.
     
  • Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D
  • Medicine Cabinet Tax.  Americans would no longer be able to purchase over-the-counter medicines with their FSA, HSA, or HRA
  • Increase Non-Qualified HSA Distribution Penalty from 10% to 20%. 
  • Corporate 1099-MISC Information Reporting.  Currently, only non-corporations providing property or services for a business must be issued at 1099-MISC.  This would expand the requirement to corporations doing business with other businesses.  The amount of reporting needed for an average business would be huge. 
  • Various industry tax grabs based on market share. $2.3 billion PhRMA; $6 billion health insurance providers; $750 million clinical labs; $4 billion medical device manufacturers

PDF version

More from Americans for Tax Reform

Top Comments


ALERT: List of All Tax Hikes In the Baucus Draft


Posted by Ryan Ellis on Wednesday, September 16th, 2009, 11:03 AM PERMALINK


Senator Baucus today released an outline of the Senate Finance Committee draft on healthcare.  Here is a list of all the tax hikes:

 

  • Individual Mandate Tax.  If you don’t sign up for health insurance, you will have to pay a tax in the following range:   
  Single Family
100-300% FPL $750 $1500
300% FPL < $900 $3800
  • Employer Mandate Tax.  $400 per employee if health coverage is not offered.  Note: this is a huge incentive to drop coverage, as $400 is much less than the average plan cost of $11,000 for families or $5000 for singles (Source: AHIP) 
  • Backdoor Death of HSAs.  By requiring that all plans (besides the few that are grandfathered) provided first-dollar coverage for most services, there would be no HSA-qualifying plans available from the Massachusetts-like exchanges 
  • Excise Tax on High-Cost Health Plans.  New 35% excise tax on health insurance plans to the extent they exceed $21000 in cost ($8000 single) 
  • Report Employer Health Spending on W-2.  This is clearly a setup for the easy individual taxation of employer-provided health insurance down the road. 
  • Cap Flex-Spending Account (FSA) Contributions at $2000. Currently unlimited. 
  • Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D 
  • Medicine Cabinet Tax.  Americans would no longer be able to purchase over-the-counter medicines with their FSA, HSA, or HRA 
  • Increase Non-Qualified HSA Distribution Penalty from 10% to 20%.  This makes HSAs less attractive, and paves the way for HSA pre-verification 
  • Corporate 1099-MISC Information Reporting.  Currently, only non-corporations providing property or services for a business must be issued at 1099-MISC.  This would expand the requirement to corporations doing business with other businesses.  The amount of reporting needed for an average business would be huge.  Paves the way for full information reporting to the IRS. 
  • Various industry tax grabs based on market share. $2.3 billion PhRMA; $6 billion health insurance providers; $750 million clinical labs; $4 billion medical device manufacturers

PDF Version

More from Americans for Tax Reform


Top Five Tax Fibs<br> From Obama's Health Speech


Posted by Ryan Ellis on Thursday, September 10th, 2009, 4:26 PM PERMALINK


1. Middle class tax hikes:  “The middle class will realize greater [health] security, not higher taxes.”

This would be a big departure from the House bill and the Baucus draft.  The House bill has four tax increases on families making less than $250,000.  President Obama himself endorsed another when he called for an individual mandate with a tax penalty.  Earlier this week, he again floated the idea of a “soda tax.”  The Baucus draft, like the House bill, contains a new tax on over-the-counter medicines purchased with an FSA or HSA

2. Individual mandate tax: “Under my plan, individuals will be required to carry basic health insurance.”

What the President is not saying is that the “stick” forcing individuals to do this will be a tax increase.  In the House bill, the tax penalty would be 2.5 percent of income.  Under the Baucus draft, the tax would range from $750 to $3800, based on family size and income.  Either way, it’s a new tax.

3. Deficit-neutral is not tax-neutral: “I will not sign a plan that adds one dime to our deficits—either now, or in the future.  Period.”

All “deficit-neutral” means is that taxes will go up at least as much as spending goes up.  Under any version of government healthcare, taxes needed to make the plans deficit-neutral would easily exceed $200 billion per year once the plans are fully phased in, according to CBO estimates.

4. Tax code makes healthcare more expensive: “We spend one-and-a-half times more per person on health care than any other country, but we aren't any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages.”

One of the reasons healthcare inflation is 8 percent a year, while regular inflation is 3 percent a year, is because of the tax code.  The tax code prevents most individuals from buying health insurance with pre-tax dollars.  Only when insurance is obtained through one’s job or the government is there a tax benefit.  There’s also almost no tax benefit to paying for medical expenses out of pocket.  These combine to make people think that someone else—not they—are paying for their health care, which drives up the cost.

5. Tax cuts don’t “cost” money: “The plan I'm proposing will cost around $900 billion over ten years…less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration.”

To make an obvious point, taxes are not the government’s money.  They are money taken by force of law from the American people.  To cut taxes doesn’t “cost” any family anything.  In fact, it saves them money.  When taxes are raised to increase government spending, that does cost money for families.
 

PDF version

More from Americans for Tax Reform

Top Comments


Where Does Obama Stand on the "Aspirin Tax"


Posted by Ryan Ellis on Tuesday, September 8th, 2009, 5:12 PM PERMALINK


House Democrat health bill would tax over-the-counter medicine purchases

There are plenty of tax hikes on working families in H.R. 3200, the House Democrat healthcare bill. Obama has been answering some tough questions about his stance on the bill, but there’s one more question he should answer:
 
Where does he stand on the “aspirin tax” that was inserted at the last minute before summer recess?
 
Just before adjourning, House Ways and Means Committee Chairman Charlie Rangel (D-NY) snuck in an additional tax hike . It would prevent Americans with health spending accounts like FSAs, HSAs, and HRAs from using the money to buy over-the-counter medicines. Under current law, families can use the money in these accounts to buy things like aspirin, pain relievers, and other non-prescription medicines.
 
Needless to say, most of the roughly 30 million families that have flex-accounts and health savings accounts do not earn more than $250,000 per year. President Obama pledged again and again to never raise “any form” of taxes on families making less than $250,000 per year. Presumably, that included working families buying medicine at the drugstore.
 
Where does Obama stand on the aspirin tax? 

 

More from Americans for Tax Reform

Top Comments


ATR Supports H.R. 3463, <br>Death Tax Repeal Permanency Act of 2009


Posted by Ryan Ellis on Monday, August 31st, 2009, 3:25 PM PERMALINK


ATR today sent the following letter (pdf) to Congressman Kevin Brady (R-TX), who has introduced a bill to fully-repeal the death tax.

Congratulations on your introduction of H.R. 3463, the “Death Tax Repeal Permanency Act of 2009.”  All Congressmen should support this common-sense legislation which prevents a job-killing tax hike.

Under current law, the death tax will proceed from a 45 percent top rate in 2009, to fully-repealed in 2010, and then up to a 55 percent top rate in 2011.  Needless to say, this is crazy.

Congress has already expressed its will, back in 2001, when bipartisan majorities in each chamber voted to fully-repeal the death tax.  Because of arcane Senate budget rules, this repeal was only effective for one year—2010.  After that, the pre-2001 law re-asserts itself (55 percent top rate, $1 million exemption).

The death tax is consistently the least popular federal tax in public opinion polling.  Between two-thirds and three-quarters of all Americans support killing the death tax.  This is despite the fact that few Americans pay it (though millions feel its sting when family farms need to be sold, businesses liquidated, and employees laid off to pay the death tax).

Put simply, this class-envy and bad-economics tax needs to be put to rest.

More from Americans for Tax Reform

Top Comments


New Report Shows Federal Overspending<br> Worse Than Expected Over Next Decade


Posted by Ryan Ellis on Tuesday, August 25th, 2009, 4:04 PM PERMALINK


There's a lot in the press today about CBO's latest report on the budget.  The media will be reporting that it shows a cumulative ten-year deficit of $7.1 trillion, which will increase the national debt by about 50% (from $14 to $21 trillion).

All that is true as far as it goes.

But it ignores the real story, as we shall see.  A deficit (or, cumulatively, the debt) is a fairly uninteresting number which is the difference between two interesting numbers--total taxes, and total spending.

Clearly, the deficit is problematic.  But that's like saying a car accident is problematic without identifying who is at fault.  A deficit takes two to tango, so where does the blame lay here--spending, or taxes?

Looking at the tax side of the equation, tax revenues are scheduled to rise from 17.7 percent of GDP in 2009 to 20.3 percent in 2019. 

Still not convinced spending is at fault?  According to CBO, the average federal tax take since 1960 is about 18.5 percent of GDP.  Taxes are already scheduled to be well above that by the end of the window.  Clearly, by any measure, America does not have an undertaxing problem.

So, taxes are going up (even after inflation, population growth, etc.)  But spending is going up at an even faster clip.  In fact, if spending simply grew with the economy from 2008 levels, the budget would nearly be in balance by the end of the period.  It isn't, because spending is completely out of control.  Spending grows from 21.1 percent of GDP in 2008 to 23.6 percent in 2019.  The long-run average for spending is closer to 20 percent of GDP.

If the deficit makes you uncomfortable, there's only one place to assign blame--the government spends too much.

More from Americans for Tax Reform

Top Comments


"Public Plan" or No "Public Plan,"<br> House Dem Health Bill Bad for Taxpayers


Posted by Ryan Ellis on Monday, August 24th, 2009, 2:11 PM PERMALINK


Whether the final health bill has a public plan (a.k.a. "co-op") or not, it's important for taxpayers to realize that the tax increases will stay.  In particular, there are four tax hikes in the House bill that violate Obama's promise not to raise taxes on familes making less than $250,000 per year:

Restrictions on tax-deductible purchases of over-the-counter medicines with health spending accounts like FSAs and HSAs.  This isn’t in the original H.R. 3200, but it did make it into Charlie Rangel’s “Chairman’s Mark.”  The description can be found at www.jct.gov, and it’s document JCX-32-09.  If you’re one of the 8 million Americans with a health savings account (HSA) or the 30 million Americans with a health flexible spending account (FSA), you will no longer be able to buy over-the-counter medicines (aspirin, etc.) on a pre-tax basis.  Contrary to the Obama rhetoric, this changes the plan you currently have, and raises your taxes in the process.  This affects anyone with these types of accounts, not just those making more than $250,000 per year.

Tax on Individuals Not Enrolled in Health Insurance (Page 167): If you don’t enroll in a health insurance plan, you will have to pay a new tax equal to 2.5% of income.  If you earn $40,000 a year and don’t have health insurance, you’ll have to pay tax of $1000.  Notice how this tax affects all individuals, not just those making more than $250,000 per year.

Tax on Businesses Not Offering Health Insurance (Page 183): If a business has a payroll of at least $500,000 and does not offer health insurance, it will be compelled to pay a new payroll tax of 8 percent.  It doesn’t matter if the business is profitable or running a loss.  Small businesses pay taxes on their owners’ 1040s. This will affect thousands of small businesses with profits of less than $250,000 per year.

IRS Can Disallow Perfectly Legal Tax Deductions They Just Don’t Like (Page 207): If a taxpayer (including one making less than $250,000 per year) uses a perfectly-legal tax deductiovn the IRS doesn’t like, the IRS will be empowered to simply disallow it.  The only reason the IRS has to give is that the tax break lacks “economic substance”—that is, the taxpayer is not taking the deduction for “substantial” or “business” reasons.  So if you want to engage in a legal activity to cut your tax bill, the IRS wins no matter what.
 

Top Comments


Congress Seeks to Slap Penalty Fee<br> on Credit and Debit Cards


Posted by Ryan Ellis on Friday, August 21st, 2009, 2:00 AM PERMALINK


Take out your wallet.

No, this isn’t a robbery.  Go ahead, take out your wallet.  Pull out a credit card, ATM card, or anything else with a black strip on the back.  Now pull out a dollar bill.

You might think that the dollar bill and the merchant card will each buy you $1.00 worth of goods and services.  Right now, that’s true.  But if Congress gets their way, your merchant card will not get you as far as cold, hard cash.  It could only buy you $0.97 or so of a $1.00 worth of stuff.

So you can be punished for using a merchant card and not trudging around lots of currency?  If Congress gets its way, this scenario will become all too real.

Under legislation being considered right now, you can actually be charged extra just for the privilege of using a credit or debit card.  Essentially, Congress will weigh in on whether you pay with cash or plastic, and will seek to punish you if you make the “wrong” choice.

This cash-is-king mentality is about more than picking winners and losers in your wallet.  It’s about government paternalism.  Congress hopes that you’ll think twice about using a credit card if you have to pay more to do so.  Millions of credit and debit transactions take place every day, and Americans don’t need the government to tell them if they’ve charged too much this month.

There’s an online petition up now to stop Congress from imposing this “merchant card fee” on every American.  Click here to learn more and sign up.

Top Comments


Healthcare Townhall Spin Translator


Posted by Ryan Ellis on Thursday, August 6th, 2009, 11:35 AM PERMALINK


Over the August recess, Congressmen will be holding townhalls on healthcare.  There's likely to be a lot of spin and doubletalk from very nervous Democrat members.  If you're going to one, you should bring a copy of this handy translation guide (PDF version).  The guts of it is pasted below:

Spin
Translation
 
No discrimination for pre-existing conditions
One can wait until one gets sick to sign up for coverage, and thereby game the system, costing the rest of us
No exorbitant out-of-pocket expenses, deductibles or co-pays
You can’t have a health savings account (HSA) even if you want to keep one. If you want to save money on your premium by having a high deductible, the government won’t let you
No cost-sharing for preventive care
An unelected and unaccountable government board of bureaucrats will decide what procedures must be first-dollar, even if you don’t value them
No dropping of coverage if you become seriously ill
This only happens in Helen Hunt movies, but Congress will demagogue it anyway to scare us
No gender discrimination
You’ll be forced to have your tax dollars pay for abortion and other things you disagree with. You’ll also be forced to purchase a plan which covers abortion on demand for all nine months
No annual or lifetime caps on coverage
Congress will tell insurance companies how they have to price their coverage and determine risk
Extended coverage for young adults
1. “Children” up to age 30 will be able to stay on their parents’ insurance at taxpayer expense
2. Inculcating the culture of entitlement and preening a generation of welfare-dependents.
Guaranteed insurance renewal so long as premiums are paid
Another red herring that Congress will use to scare people into adopting government medicine

 

More from Americans for Tax Reform

Top Comments


Pages

hidden