Ryan Ellis

How Does the Reid-Obama Health Bill<br> Raise Taxes on Your Current Health Plan?


Posted by Ryan Ellis on Thursday, November 19th, 2009, 6:23 PM PERMALINK


Many people have heard that the Reid-Obama government healthcare bill will raise taxes.  What you might not realize is that many of the tax hikes raise taxes on the health insurance you already have today—endangering the health security of you and your family.  Here’s how:


Excise Tax on Comprehensive Health Insurance Plans (Page 1979/Sec. 9001/$149.1 bil): 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.  From 2013-2015, the 17 highest-cost states are 120% of this level. 

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

Medicine Cabinet Tax (Page 1997/Sec. 9003/$5 bil): No longer allowable to use health savings account (HSA), flexible spending account (FSA), or health reimbursement arrangement (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): 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 (“Special Needs Children Tax”) (Page 1999/Sec. 9005/$14.6 bil): Imposes cap on FSAs of $2500 (now unlimited).  Will most hurt families of special-needs children, who tend to use outsized FSA deferrals.

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

Tax on Medical Devices Like Prosthetic Limbs, Wheelchairs, and Pacemakers (Page 2020/Sec. 9009/$19.3 bil): $2 billion annual tax on the industry imposed relative to shares of sales made that year.  Exempts items retailing for <$100.

Tax on Health Insurance Premiums (Page 2026/Sec. 9010/$60.4 bil): $6.7 billion annual tax on the industry imposed relative to health insurance premiums collected that year.

Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (“Retiree Rx Tax”) (Page 2034/Sec. 9012/$5.4 bil).  Will make employer-provided Rx coverage for retirees less available.

Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI (Page 2034/Sec. 9013/$15.2 bil): Waived for 65+ taxpayers in 2013-2016 only.  Will make it more difficult for working families to deduct medical expenses on their tax return.

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


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Senate Health Bill Breaks<br> Obama's $250,000 Tax Promise


Posted by Ryan Ellis on Wednesday, November 18th, 2009, 10:11 PM PERMALINK


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Over and over again, President Obama has promised not to raise “any form” of taxes on families making less than $250,000 per year.  Yet, the U.S. Senate is getting ready to consider a government healthcare bill which does just that.  Here’s how:

Health Insurance Mandate Taxes on Working Families

Individual Mandate Tax (Page 324/Sec. 1501/$8 bil): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the following schedule (capped at 8 percent of income):
 

  Single Single +1 Single +2 <
2014 $95 $190 $285
2015 $350 $700 $1050
2016, etc. $750 $1500 $2250


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):  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).

Small business owners pay their taxes on their owners’ personal tax returns.  Since this provision does not exempt business owners making less than $250,000 per year, this employer mandate tax will violate President Obama’s promise in some cases.

Tax Hikes on Healthcare Spending Accounts
   
Medicine Cabinet Tax (Page 1997/Sec. 9003/$5 bil): 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): 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/$14.6 bil): Imposes cap on FSAs of $2500 (now unlimited).

Tax Hikes on Medical Spending for Those Making Less Than $250,000

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

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

If President Obama is serious about his tax pledge, he should immediately renounce the bill.

 

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BREAKING: Full List of Tax Hikes<br> In Senate Democrat Health Bill


Posted by Ryan Ellis on Wednesday, November 18th, 2009, 9:46 PM PERMALINK


Read the full bill

Read the tax revenue score from the Joint Committee on Taxation (JCT)

Read the budget and tax score from the Congressional Budget Office (CBO)

PDF of this Document

Individual Mandate Tax (Page 324/Sec. 1501/$8 bil/Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the following schedule (capped at 8 percent of income):
 

  Single Single +1 Single +2
2014 $95 $190 $285
2015 $350 $700 $1050
2016, etc. $750 $1500 $2250

 
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.

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/$14.6 bil/Jan 2011): Imposes cap on FSAs of $2500 (now unlimited).

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.

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 of Medical Device Manufacturers (Page 2020/Sec. 9009/$19.3 bil/Jan 2010): $2 billion annual tax on the industry imposed relative to shares of sales made that year.  Exempts items retailing for <$100.

Tax on Health Insurers (Page 2026/Sec. 9010/$60.4 bil/Jan 2010): $6.7 billion annual tax on the industry imposed relative to health insurance premiums collected that year.

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/$53.8 bil/Jan 2013): Current law and changes:
 

  Wages (Employer/Employee) Self-Employment Net Income
Current Law and New Rate on First $200,000 ($250,000 MFJ) 1.45%/1.45% 2.9%
New Rate on Amount Which Exceeds $200,000 ($250,000 MFJ) 1.45%/1.95% 3.4%


The 0.5% new rate addition is not deductible for the self-employment tax adjustment.

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

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.

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Yet Another Obama Appointee<br> Is a Tax Hypocrite


Posted by Ryan Ellis on Wednesday, November 18th, 2009, 6:58 PM PERMALINK


It looks like yet another Obama Treasury Department nominee has tax problems: Lael Brainerd, who is nominated to be Assistant Treasury Secretary for International Affairs.

The tax flubs include:

  • late payments on DC unemployment tax
  • hiring a possibly illegal alien
  • late property tax payments
  • improperly claiming a home office deduction

Once again, we see an Obama nominee (at Treasury, no less) not paying her taxes.  This is the same crowd who wants to raise our taxes by hundreds of billions per year.

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Tax Pledge Alert:<br> Vote for Cloture on Motion to Proceed<br> Is Violation of Tax Pledge


Posted by Ryan Ellis on Wednesday, November 18th, 2009, 5:36 PM PERMALINK


Tomorrow at Noon, Senate Majority Leader Harry Reid (D-Nev.) is scheduled to release details of his health reform bill.  This bill is widely expected to include tax provisions which shall result in a net income tax hike.

Failing to fight back against this tax-hike bill would be a violation of the Taxpayer Protection Pledge, which binds 33 United State Senators to “oppose any and all efforts” to raise net income taxes. 

ATR considers the vote on cloture on the motion to proceed to Senator Reid’s government healthcare bill to be in direct violation of this Pledge.  Any Pledge-signing senator who votes for this cloture motion will be considered a Taxpayer Protection Pledge violator.

A VOTE TO INVOKE CLOTURE ON THE MOTION TO PROCEED TO THE REID GOVERNMENT HEALTH BILL VIOLATES THE TAXPAYER PROTECTION PLEDGE

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ATR Will Rate a Vote Against<br> Moving to Proceed to Reid Health Bill


Posted by Ryan Ellis on Wednesday, November 18th, 2009, 12:33 PM PERMALINK


This week, the United States Senate will be voting on a motion to proceed to consideration of Senate Majority Leader Harry Reid’s (D-Nev.) healthcare bill.  This bill would increase taxes by hundreds of billions of dollars over the next decade, saddle future generations with another unfunded entitlement, and destroy private sector health insurance.

A vote to proceed with this deeply-flawed legislation is tantamount to a vote in support of the bill.  A VOTE IN FAVOR OF THE MOTION TO PROCEED IS A VOTE IN FAVOR OF THE BILL.

For that reason, Americans for Tax Reform WILL RATE a vote against moving to proceed in our annual “Hero of the Taxpayer” Congressional scorecard.

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ATR Supports H.R. 3905, <br>"The Estate Tax Relief Act of 2009"


Posted by Ryan Ellis on Friday, November 13th, 2009, 5:43 PM PERMALINK


Americans for Tax Reform sent the following letter today to Congressman Kevin Brady (R-TX):

On behalf of Americans for Tax Reform, I am pleased to support H.R. 3905, “The Estate Tax Relief Act of 2009.”  While it falls short of our goal of full death tax repeal, it remains a tax cut relative to current law.

As you know, the death tax is scheduled to be reduced to a rate of “0” in 2010, only to shoot up to 55 percent in 2011.  Full repeal of the death tax remains the goal.  However, should full repeal not be possible, the next priority for taxpayers must be to avoid a tax increase relative to current law.

H.R. 3905 is a death tax cut relative to current law.  The bill calls for a ten-year, phased in reduction of the death tax rate—from 45 percent in 2009 to 35 percent in 2019.  Furthermore, the death tax exclusion rises from $3.5 million in 2009 to $5 million in 2019 (indexed to inflation after that).  This would be a permanent cut in the death tax, and moves closer to full repeal than current law would.

H.R. 3905 would score as a net tax cut relative to current law, which assumes a 55 percent death tax rate and a $1 million exemption level—permanently.  Repeal of the death tax would be preferable to H.R. 3905, but this bill is superior to current law after 2010.

I look forward to continuing to work with you and our other allies on Capitol Hill to fully repeal the death tax.

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Outline of House GOP Alternative<br> To Pelosi-Rangel-Obama Health Bill


Posted by Ryan Ellis on Tuesday, November 10th, 2009, 5:01 PM PERMALINK


Last week, ATR endorsed the House GOP alternative to H.R. 3926, the Pelosi healthcare bill.  Below are the major provisions of this alternative:

219 pages (compared to 1990 pages for House Democrat bill, H.R. 3926)

Uses the word “shall” 362 times (as opposed to 3,424 times in the House Democrat bill)


Major Provisions

  • HSA improvements, including:
  1. Saver’s credit can be used for HSA contributions
  2. HSA funds can be used to pay for insurance
  3. Greater coordination between HSA administrators and insurance companies
  4. HSA funds can be used for medical expenses incurred after insurance is bought but before HSA is opened 
  • Let individuals purchase health insurance across state lines (a.k.a. “Shadegg bill”) 
  • Association health plans (AHPs) to allow businesses and other groups to pool together across state lines to purchase coverage 
  • Medical malpractice tort reform 
  • Improve state high risk pools to give hard-to-insure people a place to buy affordable insurance 
  • Give cash rewards to states who find ways to lower health insurance premium cost growth 
  • Allow auto-enrollment for health plans at work 
  • Allows companies to incentivize wellness programs 
  • Ends federally-controlled comparative effectiveness research 
  • Beefs up fraud enforcement in Medicare and Medicaid 
  • Abortion funding restriction and conscience clause protection
  • Gives increased patent benefits to follow-on biologics


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JCT Says That Pelosi-Care Could<br> Send the Uninsured to Prison


Posted by Ryan Ellis on Friday, November 6th, 2009, 4:53 PM PERMALINK


This interesting nugget from the House Ways and Means Committee GOP staff:

Today, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail.  The JCT letter  makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.

When confronted with this same issue during its consideration of a similar individual mandate tax, the Senate Finance Committee worked on a bipartisan basis to include language in its bill that shielded Americans from civil and criminal penalties.  The Pelosi bill, however, contains no similar language protecting American citizens from civil and criminal tax penalties that could include a $250,000 fine and five years in jail.

According to the Congressional Budget Office the lowest cost family non-group plan under the Speaker’s bill would cost $15,000 in 2016.

So if you're a working family struggling to make ends meet, you either have to come up with $15,000 or potentially face jail time.

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Obama Endorses Healthcare Bill<br> That Breaks His Own Tax Pledge


Posted by Ryan Ellis on Friday, November 6th, 2009, 4:38 PM PERMALINK


During his campaign, President Obama made a “firm pledge” not to raise “any form” of taxes on families making less than $250,000 per year. Yet, he has just endorsed H.R. 3962, which does just that. Here’s how: 

Health Insurance Mandate Taxes on Working Families
 
·        Individual Mandate Excise Tax (Page 296): If an individual fails to obtain qualifying coverage, he must pay an income surtax equal to the lesser of 2.5 percent of modified adjusted gross income (MAGI) or the average premium. MAGI adds back in the foreign earned income exclusion and municipal bond interest. There is no exception for families making less than $250,000.
 
·        Employer Mandate Payroll Tax (Page 275): If an employer does not pay 72.5 percent of a single employee’s health premium (65 percent of a family employee), the employer must pay an excise tax equal to the following schedule:
 
Payroll Tax Rate
Average Payroll Size
N/A
<$500,000
2%
$500,000-$585,000
4%
$585,000-$670,000
6%
$670,000-$750,000
8%
$750,00<
 
Small business owners pay their taxes on their owners’ personal tax returns. Since this provision does not exempt business owners making less than $250,000 per year, this employer mandate tax will violate President Obama’s promise in some cases.
 
Tax Hikes on Healthcare Spending Accounts
           
·        Cap on Flex-Spending Account (FSA) contributions at $2500 (Page 325): Currently, the contribution level is unlimited
 
·        Medicine Cabinet Tax (Page 324): Americans would no longer be able to purchase over-the-counter medicines with their FSA, Health Savings Account (HSA), or Health Reimbursement Arrangement (HRA)
 
·        Increase in the Non-Qualified HSA Distribution Penalty from 10% to 20% (Page 326): This makes HSAs less attractive, and paves the way for HSA pre-verification
 
There are 30 million Americans with FSAs. About 8 million Americans have an HSA. Virtually all of them make less than $250,000 per year. These are clear tax hikes on these families
     
Making Legal Tax Deductions Not So Legal
 
·        Codification of the “Economic Substance Doctrine” (Page 349): Empowers the IRS to disallow a perfectly legal tax deduction or other tax relief merely because the IRS deems that the motive of the taxpayer was not primarily business-related. 
 
There is no exception for families making less than $250,000 per year.
 
If President Obama is serious about his tax pledge, he should immediately renounce the bill.

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