Ryan Ellis

Comprehensive List of All Tax Hikes<br> In Senate Finance "Obaucus" Health Plan

Posted by Ryan Ellis on Monday, October 12th, 2009, 3:42 PM PERMALINK

Excise Tax on High-Cost Health Plans.  New 40% excise tax on health insurance plans to the extent they exceed $26,000 in cost ($9850 single).  Exemptions made for over-55 retirees and “high-risk” professions; high-cost states phased in

Individual Mandate Tax.  If you don’t sign up for health insurance, you will have to pay a tax in the following range:

100-300% FPL$750$1500
300% + FPL$900$1900

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 actuarially-generous coverage for most services, there would be no HSA-qualifying plans available from the Massachusetts-like exchanges

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 $2500. 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. 

Various industry tax grabs based on market share. $2.3 billion PhRMA; $6 billion health insurance providers; $4 billion medical device manufacturers

Increase “haircut” of medical itemized deductions from 7.5% to 10% of adjusted gross income (AGI)

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Senate Health Bill Breaks Tax Pledge,<br> Obama Promise to Working Families

Posted by Ryan Ellis on Monday, October 12th, 2009, 3:20 PM PERMALINK

Americans for Tax Reform today sent the following letter to the Senate Finance Committee leadership:


Dear Chairman Baucus and Ranking Member Grassley:   

This week, the Senate Committee on Finance will give final consideration to a health reform bill.  It is important to note for the record that this bill violates two promises made by elected officials on the issue of taxes: first, the Taxpayer Protection Pledge made by 34 senators in which they promised to oppose income tax hikes; second, President Obama’s promise not to raise “any form” of taxes on families making less than $250,000 per year

Thirty-four senators from both parties (including eight members of the Finance Committee) have signed a Taxpayer Protection Pledge to their constituents which commits them to oppose income tax hikes.  Depending on final legislative language, there are anywhere from five to ten income tax increases in the Senate Finance plan.  Any one of these income tax hikes would be sufficient to trigger a violation of the Taxpayer Protection Pledge, since the plan is an overall net income tax increase.  For example, one provision raises the “haircut” on medical itemized deductions from 7.5 percent to 10 percent of adjusted gross income.  Another obvious pair of examples is the new $2500 cap on pre-tax flexible spending accounts (FSAs) and the new “medicine cabinet tax” which prevents FSA and health savings account (HSA) owners from using these accounts to purchase over-the-counter medicines.  Depending on how they are structured in the final legislative language, the 40 percent tax on comprehensive insurance plans and the “annual fee” on insurance, pharmaceutical and medical device firms may also be Pledge violations.

President Obama and his surrogates have gone to great pains to emphasize that he opposes “any form” of tax increase on families making less than $250,000 per year.  Even excluding the effects that indirect taxation in the Senate Finance plan will have on family budgets, there are five tax hikes which directly violate this oft-repeated promise: the individual mandate excise tax, the medicine cabinet tax on FSAs and HSAs, the $2500 cap on FSAs, the increase in the non-qualified withdrawal tax from HSAs, and the bigger “haircut” on medical itemized deductions.  It’s important to note that all of the tax hikes will ultimately be borne by working families in the form of higher prices, lower wages, and shrunken nest eggs.

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Tax Increases in Obaucus<br> Will Raise Health Insurance Premiums

Posted by Ryan Ellis on Monday, October 12th, 2009, 1:19 PM PERMALINK

Tomorrow, the Senate Finance Committee will be taking a final vote on their tax increase/government healthcare bill.

Now, we actually have an idea of what some of these tax hikes will do to health insurance premiums, thanks to a new Price Waterhouse Coopers study:

"Cadillac Plan" Excise Tax

A 40 percent tax will be imposed on health insurance plans to the extent they are more costly than $26,000 ($9850 single).  This provision will raise premiums by 5 percentage points more than they otherwise would have been.

Cash-Grab Tax on Health Industry by Sector

Purely for the purpose of raising revenue, the Senate Finance plan imposes taxes on the health insurance, pharmaceutical, and medical device sectors (assessing the tax by market share).  Since this will come out in the wash in the form of higher premiums, the PWC study concludes that this will increase premiums by 2.5 percentage points more than they otherwise would have been.

What does this mean for you?

Let's say you have a family plan that costs $15,000.  Putting these two tax increases into the system will increase your premiums by 7.5 percent, or $1125.  If you're a single person paying $7000 per year, your premiums will go up by $525.

These aren't the only premium hikes in the bill, of course.  For more, read the study.  But just looking at the tax provisions should give you an idea of who will really be footing the tab for Obama-Baucus.

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7-11 Demands That Congress<br> Raise Slurpee Prices

Posted by Ryan Ellis on Thursday, October 8th, 2009, 9:37 AM PERMALINK

Well, not quite—but it got your attention.  Recently, 7-11 delivered 1.6 million petitions to Congress demanding that 7-11 be allowed to charge extra to customers who use credit and debit cards.  Never mind that this is asking Congress to rip up a contract 7-11 has signed agreeing not to do this to us.  

What’s the issue?

Whenever we go to the store or online to make a purchase, we often choose to use a credit or debit card.  These aren’t free.  Some company has to process these transactions, make sure everyone gets paid, etc.  In order to pay for this convenience, merchant card companies charge the businesses that accept cards—usually somewhere in the neighborhood of 1.75% of the cost of whatever you and I buy (known as an “interchange fee”).

Naturally, the businesses selling things to us would like to be able to pay less for this service.  Paying less for the same service is certainly attractive.  I would like to pay less for my NFL Sunday Ticket package on DirecTV, but that's what it costs.

7-11 is trying to get around this little problem of reality by getting Congress to do their negotiating for them.  House Financial Services Committee Chairman Barney Frank (D-Mass.) is marking up a bill this week, H.R. 2382, the “Credit Card Interchange Fees Act of 2009.”  It would for the first time use the force of law to nullify valid contracts negotiated in good faith between the merchant card industry and retailers.  The most pernicious action would be to allow businesses to charge us more for the privilege of using a merchant card (a practice we’re protected against by the current merchant card contract).  The hope is that this Congressionally-obtained bargaining chip can be used to negotiate a lower interchange fee.

The retailers and Congressman Frank will tell you they want to be able to charge less to those who pay with cash.  But unless Congress is going to get into the business of setting the price of everything from lattes to licorice, the reality is this will leave the base price the same and become a surcharge for card-swiping customers.  The practical effect of this legislation is that everything we buy could cost more if we use a credit or debit card rather than cash.  

You might remember that when preening Congressmen bash merchant card companies this week.

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Obama Allies Float a VAT...Again

Posted by Ryan Ellis on Monday, September 28th, 2009, 1:41 PM PERMALINK

On Sunday, John Podesta (former Clinton COS and late head of the Obama transition team) floated a VAT:

“There’s going to have to be revenue in this budget,” said Podesta, Clinton’s former chief of staff and co-chairman of President Barack Obama’s transition team, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing today.

A so-called consumption tax would “create a balance” with European and Japanese economies and “could potentially have a substantial effect on competitiveness,” said Podesta. Value- added taxes in Europe and Japan encourage savings by taxing consumption.

Podesta said such a tax may be regressive, but can be balanced by exempting some products and using “the money to support low-wage workers.”

If this sounds familiar, it should.  During the Memorial Day recess, Obama Administration officials refused to rule out a VAT.  House Ways and Means Committee Chairman Charlie Rangel (D-NY) suggested that a VAT might be a good way to pay for Obamacare.

It goes without saying that a value-added tax is applied to most everything consumed by everybody.  Not only does that make it highly regressive, it also is a clear violation of President Obama's repeated promise not to raise "any form" of taxes on families making less than $250,000 per year.

ATR has run an Anti-VAT Congressional caucus since the early 1990s.  It currently has 54 Congressmen and 4 Senators.  We sent a letter (House, Senate) to the Hill today trying to punch up that number.

It's coming.  The Left does not have enough money to pay for everything.  A VAT is too tempting for them.

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Interesting Tax Amendments<br> Offered on Baucus Health Bill

Posted by Ryan Ellis on Tuesday, September 22nd, 2009, 3:25 PM PERMALINK

This week, the Senate Finance Committee will be considering amendments to the Baucus-Obama government healthcare plan.  The full list of amendments on the tax side can be found here.  Below are some I thought were noteworthy:

  • 466 (Rockefeller): eliminate HSAs (kind of makes it obvious what the endgame is)
  • 497 (Hatch): give "Cadillac plan" tax transition relief to any state which begins with the letter "U"
  • 501 (Hatch)/532 (Bunning): reverses the "medicine cabinet tax" by allowing over-the-counter medicines to be deductible as an itemized deduction
  • 511 (Hatch): prevents ACORN from distributing any funds in Baucus-Obama
  • 534 (Crapo/Roberts): prevents any tax hikes in the bill from hitting joint filers with AGI of less than $250,000 and all other taxpayers with AGI less than $200,000 (also see #541 by Ensign)
  • 543 (Ensign): strike the word "fee" everywhere it's found in the bill and replace with "tax"
  • 546 (Ensign): ensure that federal employees' (including elected officials') health insurance plans that exceed the "Cadillac" level must pay the excise tax, notwithstanding any transition relief in the bill

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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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