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Obama Does “Fair Share” of Whining about Truth on Obamacare Tax Hikes
Over the last couple of months, Americans for Tax Reform has highlighted the 20 new or higher taxes on American families and employers created by Obamacare. The significance of these tax increases is that they are a direct violation of candidate Obama’s promise not to raise “any form” of taxes on these families.
In an attempt to justify this widely unpopular piece of legislation, the Obama campaign released their own sort of “Fact Check.” The response, however, missed the mark by ignoring hard numbers and common sense. They chose 5 of the 20 overall new or higher taxes to defend.
- The Medical Device Manufacturing Tax. This is a $20 billion tax increase that Obamacare imposes on medical devices like pacemakers, wheelchairs, joint replacements, and other costly medical devices. The Obama campaign attempted to justify this tax by saying, “the law simply asks the industries that will gain more business from the expansion of coverage to pay their fair share.” They did not deny that it was a tax increase. Instead reverted to the age old rhetorical nonsense of saying that if you are a business and make money, you should give it to the government.
Even liberal Democratic Massachusetts Senate candidate Elizabeth Warren thinks the medical device tax is a bad idea. She wrote an op-ed in opposition of the tax, saying:
“When Congress taxes the sale of a specific product through an excise tax, as the Affordable Care Act does with medical devices, it too often disproportionately impacts the small companies with the narrowest financial margins and the broadest innovative potential. It also pushes companies of all sizes to cut back on research and development for life-saving product.”
What Warren understands in this particular circumstance and President Obama does not is that when you make it more expensive to produce a product, you hurt businesses.
On the 2.3% excise tax, the trade association for medical device makers such as Abbott Laboratories and Medtronic says:
“Many companies will owe more in taxes than they generate from their operations. The result will be devastating to innovation, patient care and job creation.”
Becton, Dickinson & Co. is another company that produces medical devices for hospitals. In an interview with a local paper, Chairman, CEO, and president of the company, Vince Forlenza had this to say of the tax:
It’s a “huge tax increase” for the company, equaling about $50 million per year in the United States. He noted that “it’d be very difficult in this environment for hospitals…to pass that on.”
Asking small businesses who produce life-saving devices to pay their “fair share” is an attack against the innovation and entrepreneurial spirit that motivates businesses to develop technologies that do in fact prolong and save lives.
- The High Medical Bills Tax. Current law permits Americans to deduct medical expenses if the costs are more than 7.5% of their adjusted gross income. Obamacare increases this threshold to 10%, resulting in a $15.2 billion tax increase.
The Obama campaign did not deny that this was a tax increase. Instead they said essentially responded by saying that because everyone will have healthcare, getting sick won’t make you bankrupt, thus the threshold was increased. If you thought that following the logic on that was difficult, you’re not alone. Thanks to Obamacare, you now have to spend more money in a given year on healthcare to deduct those healthcare costs from your taxes.
- The Flexible Spending Account Cap – aka Special needs Kids Tax. Prior to Obamacare, families were permitted to set aside an unlimited portion of their earnings to pay for certain medical and health care expenses. Under Obamacare, a cap of $2500 is imposed on everyone. This new cap hits the parents of children with special needs, who can use this money for special education, the hardest.
The Obama campaign says that “the change has no impact on the vast majority of families.” The President is correct: Many families do not have special needs children. For those who do, however, punishing them by limiting how much money that are permitted to set aside and spend through flexible spending accounts is neither “fair” nor just. It burdens them with higher personal costs. The CBO estimates this new cap will cost $13.2 billion over the next ten years.
The Surtax on Investment Income. This is the largest tax increase in Obamacare. Amounting to $123 billion over the next ten years, Obamacare creates a new 3.8% surtax on investment income earned in households making more than $250,000 ($200,000 for single people). The following top tax rates on investment income will rise next year:
- Capital Gains – The current 15% tax rate will increase to 23.8%.
- Dividends – The current 15% dividends tax rate will nearly triple to 43.4%
The Obama campaign does not deny that this is a tax increase. Instead, they double down by saying that “wealthy Americans who make a majority of their income from investments shouldn’t be exempt from paying their fair share.”
According to the Tax Foundation's analysis of IRS data, 70% of households over age 55 receive dividend income. 71% of all dividends paid flow to these households. This tax increase disproportionally falls hard on seniors.
- Obamacare Medicare Payroll Tax Increase. This .9% tax increase on income made over $200,000 amounts to $86 billion in higher taxes. The Obama campaign doesn’t even try to defend this as anything but a tax increase. Instead, they say that they’re just asking Americans to “do their fair share” by giving the government more of their hard earned money.
What remains clear about Obamacare is that the law’s tax hikes hit everyone with hundreds of billions of dollars in new or higher taxes. From seniors to small businesses, there is no escaping the higher costs imposed on everyone thanks to Obamacare.