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Saturday, December 19, 2009
3:30 PM EST
John Kartch

and Ryan Ellis

Senate Health Bill Now Contains Seven Tax Hikes on Families Making Less than $250,000

With the release of Sen. Harry Reid’s Manager’s Amendment, the Senate healthcare bill now contains seven tax hikes on families making less than $250,000 per year. 

Each of the seven tax hikes are in violation of President Obama’s “firm pledge” not to raise “any form” of taxes on these families. Obama’s promise remains for all to see at the Change.gov website: “no family making less than $250,000 will see their taxes increase.” White House spokesman Robert Gibbs has confirmed that there are “no caveats” to Obama’s promise.
 
Listed below are the seven Obama-pledge-breaking tax hikes (Page numbers reference original Reid-Obama bill unless noted):
 
Individual Mandate Tax (Page 324/Sec. 1501/$15 bil/Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following (page 71 of manager’s amendment updates Reid bill):
 
 
Single
2 Persons
3+ Persons
2014
$495/0.5% AGI
$990/0.5% AGI
$1485/0.5%/AGI
2015
$495/1.0% AGI
$990/1.0% AGI
$1485/1.0%/AGI
2016
$495/2.0% AGI
$990/2.0% AGI
$1485/2.0%/AGI
 
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). Indexed to inflation after 2011 (added on page 363 of manager’s amendment).
     
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 Indoor Tanning Services (Page 373 of Manager’s amendment/$2.7 billion/July 1, 2010): New 10% excise tax on indoor tanning salons

Click here for a printable PDF of this document
 

Posted by John Kartch and Ryan Ellis on Saturday, December 19, 2009 3:30 PM EST

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