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INDEX

Obamacare and Taxes: The Final Tab

From Ryan Ellis on Monday, April 5, 2010 2:38 PM
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New Health Law Raises Taxes on Working Families By Over $500 Billion

Individual Mandate Excise Tax (Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following

  1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016 + 2.5% AGI/$695 2% AGI/$1390 2.5% AGI/$2085

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 (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 $2000 for all full-time employees.  Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. 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). 

Combined score of individual and employer mandate tax penalty: $65 billion/10 years

Surtax on Investment Income ($123 billion/Jan. 2013):  Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single).  This would result in the following top tax rates on investment income  

  Capital Gains Dividends Other*
2010 15% 15% 35%
2011-2012 (current law) 20% 39.6% 39.6%
2011-2012 (Obama budget) 20% 20% 39.6%
2013+ (current law) 23.8% 43.4% 43.4%
2013+ (Obama budget) 23.8% 23.8% 43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens.

Excise Tax on Comprehensive Health Insurance Plans ($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family).  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions.  CPI +1 percentage point indexed. 

Hike in Medicare Payroll Tax ($86.8 bil/Jan 2013): Current law and changes:

  First $200,000 ($250,000 Married) Employer/Employee All Remaining Wages Employer/Employee
Current Law 1.45% / 1.45% 2.9% self-employed 1.45% / 1.45% self-employed
Obamacare Tax Hike 1.45% / 1.45% 2.9% self-employed

1.45% / 2.35%
3.8% self-employed

Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer able 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 ($1.4 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.

Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited).  Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in theUnited States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C.(National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

Tax on Medical Device Manufacturers ($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exempts items retailing for <$100.

Raise "Haircut" for Medical Itemized Deduction from 7.5% to 10% of AGI ($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. 

Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons 

Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D ($4.5 bil/Jan 2013)

Blue Cross/Blue Shield Tax Hike ($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

Excise Tax on Charitable Hospitals (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 ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Health Insurers ($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year.  Phases in gradually until 2018.  Fully-imposed on firms with $50 million in profits

$500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 bil/Jan 2013)

Employer Reporting of Insurance on W-2 (Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.

Corporate 1099-MISC Information Reporting ($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

“Black liquor” tax hike (Tax hike of $23.6 billion).  This is a tax increase on a type of bio-fuel.

Codification of the “economic substance doctrine” (Tax hike of $4.5 billion).  This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.

JCT Score

CBO Score

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Comments

I can't even read the entire post - it hurts too much. I cannot believe our government thinks they can get away with this!
>> Tea Partier Monday, April 5, 2010 2:51 PM Report Comment

People who cant afford insurance will get $5,000 - $8,000 refunds. Why shouldnt they pay a surcharge? Why shouldnt Americans who make more money pay more taxes? During Bush admin. we lost GOD in our schools, and our deficit went up Trillions of dollars for WAR. Our new president (democrat OR republican) inherited problems and no support. Im ashamed of fellow the disrespect of our president and the immediate vow to fight him. America used to mean opportunity, freedom, and pride. Im sure congress enjoys their paycheck and health care and dont want to pay more taxes. We dont need terrorists from other countries, we have them here breaking down our society from within.
>> MMggs Thursday, April 15, 2010 10:58 AM Report Comment

The statement "$500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 bil/Jan 2013)" is a completely incorrect interpretation of the bill. I'm not saying I like the bill, but let's not go making things up to further our argument, mmmmkay? The bill states that anyone who makes over $500,000 won't be able to take deductions against anything above/beyond $500,000. The language is a bit confusing, but that's what it says. They aren't setting a "compensation limit" by any stretch of the imagination. They're just saying they're funding the bill by increasing the tax on healthcare executives. Believe me, Angela Braley makes WAY too much money anyways.
>> Jason Thursday, April 15, 2010 11:44 AM Report Comment

MMggs - should check your facts " During Bush admin. we lost GOD in our schools..." This is the most ridiculous one yet, how can this be when it is the Liberal Left not the Bush type Conservatives that continuously file law suit after law suit to remove as much reference to God and Christianity any time it comes up. These people fail to remember that this country was founded on Judeo/Christian ideals. These are also the same people that put a COEXIST sticker on thier vehicles, and failing to realize that the first symbol ( cresent moon and star ) consider all others to be Infidels and would kill and exterminate the rest, so the COEXIST must be a oneway idea
>> USMCVET Wednesday, July 7, 2010 10:27 PM Report Comment

I'm sure many of you recall the time when Khrushchev pounded the table in N.Y. and stated that we would bury ourselves. Have we already started the digging? I'm thinking we have. On another part, regarding God in the schools, there is a High School in my area that from time to time gather around our great flag in front of the school, hold hands and pray. Two things I know they pray for are PEACE and TEENAGE suicides. The prayer may not be inside the school building but it is right outside the main entrance.
>> dondor Friday, July 9, 2010 10:07 AM Report Comment

Is there a tax on home sales?
>> Joe L. Monday, July 19, 2010 11:08 AM Report Comment

This is going to have disatrous consequences for everyone except illegals and people on social programs. We own a small business and the extra paperwork alone will be a nightmare. The burden and cost might not make it worth working as much as we do. My grandfather was a doctor. He told me 25 years ago that I should not go into the medical field because he foresees it becoming socialistic. I wasn't sure what that meant back then but now do. What he didn't see was that we would have a President who wants to turn everything in society socialistic and it wouldn't matter what field we went into. Workers & entreprenuers all affected adversely by being taxed to death.
>> macie Thursday, July 29, 2010 10:11 AM Report Comment

Gotta pay for those welfare benefits for the people too busy having kids and partying to exercise personal responsibility in their life. I don't mind helping the truly needy--they deserve more than what they get. But anyone who's worked in an ER knows how lopsided the percentages are of people who really could support themselves in the welfare rolls. Good old Obama, the man who will finally bring Communism to the US. Mao would be proud. People have the right to know the truth because an election is coming in November.
>> J Hollenback Monday, August 2, 2010 8:41 PM Report Comment

There is a danger of creating a fear borne of blowing things out of proportion just to promote a cause... We do not need more taxes but there are so many wealthy citizens that have always enjoyed tax cuts that the middle income citizens do not receive. What is wrong with having the wealthy help the poor and middle income citizens (I am saying "citizens here not illegals) by leveling the playing field on taxes? The middle class citizens are on a treadmill with very few options of EVER increasing their income to the likes of what the "big company" executives (the likes of AIG)???? I do not think that most of the wealthy citizens of this country have done anything that did not increase their bottom line.
>> DMC Wednesday, August 4, 2010 8:37 AM Report Comment

By time the government gets through taxing all of us for everything we will all have to live in the streets because we won't have a paycheck to live on and of course there won't be any welfare to help the people that did work to help themselves. How pitiful is this country and what is is coming to? The sad part is I have grandchildren and what will they face when their adults? God help us all
>> T Klausner Wednesday, August 4, 2010 2:14 PM Report Comment

I feel like I'am the smallest person in the U.S. and have no help to fight the government. I'm not a business owner nor have the money to fight. I'm newly divorced, live on my own and live under the poverty level. What possibly could I do to help?? I have e-mailed Senators and Representatives trying to save our education systems due to the fact I drive a school bus. Again, I feel helpless. I feel like all I can do is continue to complain to our government but I doubt they listen.
>> T Klausner Thursday, August 5, 2010 12:24 AM Report Comment

It makes me sad. Makes me feel like I can't plan anything because the rules keep changing, in the negative direction, for me to plan building a business. I am the type who wants to create jobs...but it's just so unpredictable. Government taxation plus market changes? Makes me feel defeated. I know there is always a way...at least in a free market...but I feel less free than I did a year ago.
>> Paula S Monday, August 9, 2010 12:56 PM Report Comment

and we wonder why big biz is sending jobs overseas ?????
>> Brian S Sunday, August 15, 2010 6:40 PM Report Comment

WE ARE ALL SOCIALISTS NOW!remember socialism is for the people, not the socialist.the producers are being asked to produce more while the recipients are given more.the fact is liberals could NOT survive without conservatives, but we could survive without them.Cut welfare and government handouts to those that are capable of working those jobs that the illegals are taking, and send them back to the country they came from, but let them apply for citizenship like my grandfather had to.I am one of those that will produce less for the government, but enough to still claim personal responsibility for me and my family.
>> chris Sunday, August 15, 2010 6:59 PM Report Comment

I strongly agree with you. Thats what has happened to this country. FREE HANDOUTS!! It needs to stop but chances are it won't. It's to far gone and we are to kind to all the "non-citizens"and the ones that are have become used to being "lazy". It's time for America to take our country back along with our citizens and take care of our own like they did in the past. No one took care of my children when I was raising them and now they are raising their own children struggling but doing it own their own.
>> Tklausner Monday, August 16, 2010 12:52 AM Report Comment

Has everyone forgotten Sept 2008. After 6 yrs of $$WAR$$, Bush Admin pushed to BAILOUT wallstreet. After "the people" said NO bailout, "They" did it anyway. Guess we dont matter! Nov '08 Obama was elected President (too late to do anything about the Bush bailout). Dec '08 delivery of bailout money began. No One keept track of where money went once banks had it. Then BONUSES... Jan '08 Obama took over, most of bailout money is gone. No one knew where money went inside banks... (B O N U S E S ??) '09 Obama did 2nd bailout, to auto industry BUT made sure they were HELD ACCOUNTABLE AND PAID MONEY BACK in a timely mannor. Where I work, if the company is in trouble, NO ONE gets a BONUS and people keep thier J O B's!
>> MMggs Monday, August 16, 2010 2:06 PM Report Comment

I would like for USMVET to show me where. in the Constitution, it refers to Judeo/Christian ideals.Godd luck! It simply does not exist. Judeo/Christian ideals have a limited appeal, wheras the Constitution applies protection to a much broader band of peopleand other religious ideals.
>> Centrist Wednesday, August 18, 2010 11:04 PM Report Comment

To JOE L - yes, if your house is worth more than you paid, that capital gain must be re-invested into a new house when you sell your old one. If that same amount is not put into the new house, then the capital gain above the down payment on your new house is considered taxable.
>> Just a citizen Thursday, August 19, 2010 2:34 PM Report Comment

To Joe L -- just a citizen is NOT a tax person. Not taxed on capital gains on home if you had profit of less than $250K if single or $500K if married and you lived in house as primary residence for 2 of last 5 years. Lots of people on this site need to do some basic googling and research!
>> karen Monday, August 30, 2010 5:08 PM Report Comment

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