Ryan Ellis

New Tax Hikes in Chairman's Mark of<br> Baucus-Obama Health Plan


Posted by Ryan Ellis on Tuesday, September 22nd, 2009, 1:41 PM PERMALINK


Very quickly, here are the tax increase changes from Baucus' original plan to the Chairman's mark:

  • excise tax on uninsured families making more than 300 percent of the federal poverty line reduced from $3800 to $1900.  Unclear on other levels (single/family, 300 percent FPL/<300 percent FPL)
  • excise tax on "Cadillac health plans" raised from 35 percent to 40 percent
  • threshold for "Cadillac plans" unchanged ($21,000 family/$8000 single), but index is now inflation-plus-1 percent
  • exceptions on "Cadillac plans" made for high-risk professions and over-55 retirees
  • new cap on health FSAs now $2500, not $2000
  • new tax on clinical labs dropped
  • new income exclusion for Indian tribe health benefits
  • raises "haircut" on medical itemized deductions from 7.5 percent to 10 percent of adjusted gross income, which conforms the regular tax deduction to the AMT deduction
  • the small business tax credit would be extended on a refundable basis to 501(c)(3) non-profits which owe no income taxes
  • no adjustments to income can be taken into consideration for eligibility for the individual health tax credit.  This includes IRA deductions, small business retirement plans, self-employed health insurance premiums, HSA contributions, the student loan interest deduction, the teacher classroom expenses deduction, alimony payments, the tuition and fees deduction, and the savings early withdrawal penalty

 

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Official Score of Tax Hikes<br>In Baucus-Obama Health Bill


Posted by Ryan Ellis on Tuesday, September 22nd, 2009, 1:27 PM PERMALINK


The Joint Tax Committee has come out with an official revenue score of all the tax increases contained in the Baucus-Obama plan considered by the Senate Finance Committee this week.

The overall score is a net tax hike of $357.7 billion over ten years.

Note: This does NOT include the revenue effects from the excise tax on the uninsured.  This is most likely because the last-minute "chairman's mark" reduced the tax on families making more than 300 percent of the federal poverty line from $3800 to $1900, and Joint Tax just didn't have time to re-do the numbers.

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White House Spin Continues:<br> When Is an Excise Tax NOT an Excise Tax?


Posted by Ryan Ellis on Tuesday, September 22nd, 2009, 1:21 PM PERMALINK


In a truly brazen and out-of-touch move, the Obama White House continued to dig in its heels yesterday in the face of President Obama’s ridiculous assertion that an excise tax is not a tax.  Below we break down how the White House staff fumbles and bumbles a defense of their boss’ willful ignorance of the English language.  First, here is what the plan written by Senator Max Baucus’ staff says about the matter:

“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.”

Now, here’s what White House spokesman Linda Douglass had to say, with our analysis:

***

The White House on Monday reiterated that it doesn't view the fee as a tax. Officials said Americans are already paying as much as $1,000 a year in higher medical costs to subsidize caring for the uninsured, and would save money if lawmakers pass the health overhaul. They noted that lower-income people would get federal help to buy insurance and avoid the penalty.

ATR: The fact that people might be paying for uncompensated care has nothing to do with the fact that the additional cost in the Baucus plan is a TAX, as the President has denied and his staff has reiterated, even in the face of plain language.  Also, the fact that poorer Americans are getting subsidized doesn’t change the fact that the Baucus-Obama excise tax will fall squarely on families making less than $250,000 per year (in violation of Obama’s repeated campaign promise).

"People would be required to get health insurance, just as they are required to have auto insurance or to send their children to school," said White House spokeswoman Linda Douglass. "A fee would only be imposed on those few who could afford to purchase insurance, but refuse to do so."

ATR: An auto insurance mandate doesn’t translate into people having auto insurance, as mandate-state California demonstrates with its 18 percent uninsured motorist rate.  As for the school mandate, the White House just managed to threaten the vote-moving issue of millions of home-schooling parents who don’t want the government forcing their child to go to government school.

Getting back to the excise tax, would this only apply to “a few who could afford to purchase insurance, but refuse to do so?”  The excise tax would apply to any uninsured household earning income at least at the federal poverty line, which is $21,834 for a family of four with two children.  The great majority of the uninsured are above the federal poverty line, and would have to pay this new excise tax.
 

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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!

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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

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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

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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.
 

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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? 

 

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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.

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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.

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