John Kartch

The Top 20% of Households Pay 88% of Federal Income Taxes

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Posted by Alex Hendrie, John Kartch on Thursday, July 27th, 2017, 1:37 PM PERMALINK

According to the Congressional Budget Office:

 

-The top one percent of households pay 38.3% of federal income taxes and 25.4% of total federal taxes.

- The top 20 percent of households pay 88% of federal income taxes and 69% of total federal taxes.

- The top one percent of households pay an average income tax rate of 23.6% while the middle quintile pays an average income tax rate of 2.6%.

- The top one percent of households pay an average total tax rate of 34% while the middle quintile pays an average total tax rate of over 12.8%.  

- The top 20 percent of households pay an average total tax rate of 26.3 percent while the middle quintile pays an average total tax rate of 12.8%.

The data is shown below:

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List of Obamacare Taxes Repealed in Senate Health Bill

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Posted by John Kartch on Thursday, July 13th, 2017, 5:01 PM PERMALINK

 

[Click here for a printable version of this list.]

The new Senate health bill abolishes the following Obamacare taxes:

  • Abolishes the Obamacare Individual Mandate Tax which hits 8 million Americans each year. 
     
  • Abolishes the Obamacare Employer Mandate Tax. 
     
  • Abolishes Obamacare’s Medicine Cabinet Tax, which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $5.6 billion tax cut.
     
  • Abolishes Obamacare’s Flexible Spending Account tax on 30 million Americans. This is an $18.6 billion tax cut.
     
  • Abolishes Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $36 billion tax cut.
     
  • Abolishes the Obamacare health insurance tax. This is a $144.7 billion tax cut.
     
  • Abolishes the Obamacare medical device tax. This is a $19.6 billion tax cut.
     
  • Abolishes the Obamacare tax on prescription medicine. This is a $25.7 billion tax cut.
     
  • Abolishes the Obamacare tax on Medicare Part D retiree prescription drug coverage. This is a $1.8 billion tax cut.
     
  • Abolishes Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.
     
  • Abolishes Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.
     
  • The Senate bill also delays (until 2026) the “Cadillac” tax on employer-provided insurance. This saves taxpayers $66 billion over the next ten years.
     
  • The Senate bill also doubles the maximum HSA contribution from $3,400 to $6,550 for individuals and from $6,750 to $13,100 for families. According to CBO, this saves taxpayers $18.6 billion.
     
  • The Senate bill also allows Americans to use Health Savings Account funds to pay for health insurance premiums. The option to use HSA funds, which are pre-tax, for insurance premiums will provide significant tax relief to millions of households. The CBO has not yet released a score for this tax cut. It is set to go into effect in 2018.

 

Reminder: President Obama had promised repeatedly that he would not raise any form of tax on any American earning less than $250,000 per year, but he broke the promise when he signed Obamacare. Passage of the Senate’s Better Care Reconciliation Act means tens of millions of middle income Americans will get tax relief from Obamacare's long list of tax hikes.

Here is a more detailed list of the Obamacare taxes abolished in the Senate bill:

REPEALED: Obamacare Individual Mandate Tax and Employer Mandate Tax: Under Obamacare, anyone not buying “qualifying” health insurance – as defined by the Obama-era Department of Health and Human Services -- must pay a steep tax to the IRS. In 2015, eight million households paid this tax. Most Americans stuck with this tax are from low and middle income households. The IRS uses the Orwellian phrase “shared responsibility payment” to describe this tax.

This tax is a minimum of $695 for individuals, while families of four have to pay a minimum of $2,085. Americans pay these amounts or 2.5% of their AGI, whichever is higher. The Senate health bill repeals this tax and the employer mandate tax.

REPEALED: Obamacare Medicine Cabinet Tax on HSAs and FSAs: Under Obamacare, the 20.2 million Americans with a Health Savings Account and the 30 million covered by a Flexible Spending Account are no longer able to purchase over-the-counter medicines using these pre-tax account funds. Examples include cold, cough, and flu medicine, menstrual cramp relief medication, allergy medicines, and dozens of other common medicine cabinet health items. The Senate health bill will abolish this tax, saving Americans $5.6 billion over the next ten years.

REPEALED: Obamacare Flexible Spending Account Tax: Under Obamacare, the 30 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500. The Senate health bill will abolish this tax, saving Americans $18.6 billion over the next ten years.

Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap. Now, parents looking to sock away extra money to pay for braces find themselves quickly hitting this new cap, meaning they have to pony up some or all of the cost with after-tax dollars. Needless to say, this tax especially impacts middle class families.

There is one group of FSA owners for whom this new cap is particularly cruel and onerous: parents of special needs children. Families with special needs children often use FSAs to pay for special needs education. Tuition rates at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax increase limits the options available to these families.

According to the U.S. Census Bureau, there are 2.8 million special needs children nationwide. As noted by the Neurological and Physical Abilitation Center, this Obamacare tax "will especially hurt parents of special needs kids because many use FSAs to pay for special needs education."

REPEALED: Obamacare Chronic Care Tax: Under Obamacare, this income tax increase directly targets middle class Americans with high medical bills. The tax hits 10 million households every year. Before Obamacare, Americans facing high medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, approximately 10 million families took advantage of this tax deduction each year before Obamacare. Almost all were middle class: The average taxpayer claiming this deduction earned just over $53,000 annually in 2010. ATR estimates that the average income tax increase for the average family hit with this Obamacare tax is $200 - $400 per year.

The Senate health bill will abolish this tax, saving Americans $36 billion over the next ten years.

REPEALED: Obamacare HSA Withdrawal Tax Hike: Under Obamacare, this provision increases the 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. The Senate health bill will abolish this tax, saving Americans $100 million over the next ten years.

REPEALED: Obamacare Ten Percent Excise Tax on Indoor Tanning: The Obamacare 10 percent tanning tax has wiped out thousands of small businesses, many owned by women. This Obamacare tax increase was the first to go into effect (July 2010). This petty, burdensome, nanny-state tax hits both the business owner and the consumer. Industry estimates show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women. 

The ten percent tax is steep and its complexity is especially burdensome to employers. Adding insult to injury, the Obama IRS didn't bother to provide compliance guidelines after three quarterly tax payment deadlines had passed. The Obama IRS was called out by the Treasury Inspector General, who wrote: "By the time [IRS] notices were issued, tanning excise tax returns had been due for three quarters. Late filing of these returns would result in the taxpayer owing the unpaid tax, plus interest and penalties."

The Senate health bill will abolish this tax, saving Americans $600 million over the next ten years.

REPEALED: Obamacare Health Insurance Tax: In addition to mandating the purchase of health insurance through the individual mandate tax, Obamacare directly increases the cost of insurance through the health insurance tax.

The total revenue this tax collects is set annually by Treasury and is then divided amongst insurers relative to the premiums they collect each year. While it is directly levied on the industry, the costs of the health insurance tax are inevitably passed on to small businesses that provide healthcare to their employees, middle class families through higher premiums, seniors who purchase Medicare advantage coverage, and the poor who rely on Medicaid managed care.

According to American Action Forum, the Obamacare health insurance tax will increase premiums by up to $5,000 over a decade and will directly impact 1.7 million small businesses, 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs. The tax is also economically destructive – the National Federation for Independent Businesses estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

The Senate health bill will abolish this tax, saving Americans $144.7 billion over the next ten years.

REPEALED: Obamacare Tax on Medical Device Manufacturers: Under Obamacare, this law imposes a new 2.3% excise tax on all sales of medical devices. The tax applies even if the company has no profits in a given year. The Senate health bill will abolish this tax, saving Americans $19.6 billion over the next ten years.

REPEALED: Obamacare Tax on Prescription Medicine: Obamacare imposed a tax on the producers of prescription medicine based on relative share of sales. The Senate health bill will abolish this tax, saving Americans $25.7 billion over the next ten years.

REPEALED: Obamacare Elimination of Deduction for Medicare Part D Retiree Prescription Drug Coverage: The Senate health bill will abolish this tax, saving Americans $1.8 billion over the next ten years.

Also of note:

The Senate health bill doubles the annual contribution limit for HSAs, raising the maximum contribution from $3,400 to $6,550 for individuals and from $6,750 to $13,100 for families. Under this law, taxpayers will be able to set aside more of their income as pre-tax savings. The CBO estimates this provision will save taxpayers $18.6 billion over the next ten years.

The Senate health bill expands HSAs so that Americans can use these pre-tax funds to pay for insurance premiums. The CBO has no yet released a score for this tax cut.

Click here for a printable version of this list.

 

Photo credit: Gage Skidmore

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Obamacare Repeal Bill Cuts Taxes $701 Billion

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Posted by John Kartch, Alex Hendrie on Monday, June 26th, 2017, 4:28 PM PERMALINK

The Senate’s healthcare bill repeals Obamacare taxes by $701 billion over the next ten years,  according to an analysis by the Congressional Budget Office released Monday.

Obamacare imposed a massive tax increase on the American people. As a presidential candidate in 2008, Barack Obama promised repeatedly that he would not raise any form of tax on any American earning less than $250,000 per year. But he broke the promise when he signed Obamacare. Passage of the Senate’s Better Care Reconciliation Act means tens of millions of middle income Americans will get tax relief from Obamacare's long list of tax hikes.

The Senate bill abolishes the following taxes imposed by Obama and the Democrat party in 2010 as part of Obamacare:

  • Abolishes the Obamacare Individual Mandate Tax which hits 8 million Americans each year. Combined with the Employer Mandate Tax listed immediately below, this is a $137 billion tax cut.
  • Abolishes the Obamacare Employer Mandate Tax. Combined with the Individual Mandate Tax listed immediately above, this is a $137 billion tax cut.
  • Abolishes Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $5.6 billion tax cut.
  • Abolishes Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $18.6 billion tax cut.
  • Abolishes Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $36 billion tax cut.
  • Abolishes Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.
  • Abolishes Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.
  • Abolishes the Obamacare health insurance tax. This is a $144.7 billion tax cut.
  • Abolishes the Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.
  • Abolishes the Obamacare medical device tax. This is a $19.6 billion tax cut.
  • Abolishes the Obamacare tax on prescription medicine. This is a $25.7 billion tax cut.
  • Abolishes the Obamacare 0.9 Medicare payroll tax increase. This is a $58.6 billion tax cut.
  • Abolishes the Obamacare tax on retiree prescription drug coverage. This is a $1.8 billion tax cut.
  • Abolishes the Obamacare remuneration tax increase on insurers. This is a $500 million tax cut.
  • The bill also delays (until 2026) the “Cadillac” tax on employer-provided insurance. This saves taxpayers $66 billion over the next ten years.

 

Here is a more detailed list of the Obamacare taxes abolished in the Senate Bill:

Individual Mandate Tax and Employer Mandate Tax: Under Obamacare, anyone not buying “qualifying” health insurance – as defined by the Obama-era Department of Health and Human Services -- must pay an income surtax to the IRS. In 2015, eight million households paid this tax. Most make less than $250,000. The Obama administration creepily used the Orwellian phrase “shared responsibility payment” to describe this tax. The Senate health bill repeals this tax and the employer mandate tax, saving Americans $137 billion over the next ten years.

For tax year 2016, the tax is a minimum of $695 for individuals, while families of four have to pay a minimum of $2,085.

 

Households w/ 1 Adult

 

Households w/ 2 Adults

Households w/ 2 Adults & 2 children

 

2.5% AGI/$695

 

2.5% AGI/$1390

2.5% AGI/$2085

Medicine Cabinet Tax on HSAs and FSAs: Under Obamacare, the 20.2 million Americans with a Health Savings Account and the 30 - 35 million covered by a Flexible Spending Account are no longer able to purchase over-the-counter medicines using these pre-tax account funds. Examples include cold, cough, and flu medicine, menstrual cramp relief medication, allergy medicines, and dozens of other common medicine cabinet health items. The Senate health bill will abolish this tax, saving Americans $5.6 billion over the next ten years.

Flexible Spending Account Tax: Under Obamacare, the 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500. The Senate health bill will abolish this tax, saving Americans $18.6 billion over the next ten years.

Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap. Now, parents looking to sock away extra money to pay for braces find themselves quickly hitting this new cap, meaning they have to pony up some or all of the cost with after-tax dollars. Needless to say, this tax especially impacts middle class families.

There is one group of FSA owners for whom this new cap is particularly cruel and onerous: parents of special needs children.  Families with special needs children often use FSAs to pay for special needs education. Tuition rates at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax increase limits the options available to these families.

Chronic Care Tax: Under Obamacare, this income tax increase directly targets middle class Americans with high medical bills. The tax hits 10 million households every year. Before Obamacare, Americans facing high medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, approximately 10 million families took advantage of this tax deduction each year before Obamacare. Almost all were middle class: The average taxpayer claiming this deduction earned just over $53,000 annually in 2010. ATR estimates that the average income tax increase for the average family claiming this tax benefit is about $200 - $400 per year.

The Senate health bill will abolish this tax, saving Americans $36 billion over the next ten years.

HSA Withdrawal Tax Hike: Under Obamacare, this provision increases the 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. The Senate health bill will abolish this tax, saving Americans $100 million over the next ten years.

Ten Percent Excise Tax on Indoor Tanning: The Obamacare 10 percent tanning tax has wiped out an estimated 10,000 tanning salons, many owned by women. This Obamacare tax increase was the first to go into effect (July 2010). This petty, burdensome, nanny-state tax affects both the business owner and the end user. Industry estimates show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women. The Senate health bill will abolish this tax, saving Americans $600 million over the next ten years.

Health Insurance Tax: In addition to mandating the purchase of health insurance through the individual mandate tax, Obamacare directly increases the cost of insurance through the health insurance tax.

The total revenue this tax collects is set annually by Treasury and is then divided amongst insurers relative to the premiums they collect each year. While it is directly levied on the industry, the costs of the health insurance tax are inevitably passed on to small businesses that provide healthcare to their employees, middle class families through higher premiums, seniors who purchase Medicare advantage coverage, and the poor who rely on Medicaid managed care.

According to the American Action Forum, the Obamacare health insurance tax will increase premiums by up to $5,000 over a decade and will directly impact 1.7 million small businesses, 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs. The tax is also economically destructive – the National Federation for Independent Businesses estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

The Senate health bill will abolish this tax, saving Americans $144.7 billion over the next ten years.

Surtax on Investment Income: Obamacare created a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 for singles). This created a new top capital gains tax rate of 23.8%.

The capital gains tax hits income that has already been subjected to individual income taxes and is then reinvested in assets that spur new jobs, higher wages, and increased economic growth. Much of the “gains” associated with the capital gains tax is due to inflation and studies have shown that even supposedly modest increases in the capital gains tax have strong negative economic effects.

The Senate health bill will abolish this tax, saving Americans $172 billion over the next ten years.

Payroll Tax Hike: Obamacare imposes an additional 0.9 percent payroll tax on individuals making $200,000 or couples making more than $250,000. The Senate health bill will abolish this tax, saving Americans $58.6 billion over the next ten years.

Tax on Medical Device Manufacturers: Under Obamacare, this law imposes a new 2.3% excise tax on all sales of medical devices. The tax applies even if the company has no profits in a given year. The Senate health bill will abolish this tax, saving Americans $19.6 billion over the next ten years.

Tax on Prescription Medicine: Obamacare imposed a tax on the producers of prescription medicine based on relative share of sales. The Senate health bill will abolish this tax, saving Americans $25.7 billion over the next ten years.

Elimination of Deduction for Retiree Prescription Drug Coverage: The Senate health bill will abolish this tax, saving Americans $1.8 billion over the next ten years.

“Obamacare promised to reduce individual insurance premiums – a lot. Premiums rose – a lot,” said Grover Norquist, president of Americans for Tax Reform. Obama promised no tax hikes on anyone earning less than $250,000 – that was a lie. Taxes increased. Healthcare costs increased. Obamacare failed. By its own promised goals, it failed. It is time to repeal failure and reform healthcare to protect consumers, not bureaucracy.”

 

Photo by Marc Nozell used under a Creative Commons license

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List of Obamacare Taxes Repealed

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Posted by John Kartch on Thursday, May 4th, 2017, 6:11 PM PERMALINK

 

The American Health Care Act (HR 1628) passed by the House today reduces taxes on the American people by over $1 trillion. The bill abolishes the following taxes imposed by Obama and the Democrat party in 2010 as part of Obamacare:

-Abolishes the Obamacare Individual Mandate Tax which hits 8 million Americans each year.

-Abolishes the Obamacare Employer Mandate Tax. Together with repeal of the Individual Mandate Tax repeal this is a $270 billion tax cut.

-Abolishes Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $6 billion tax cut.

-Abolishes Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $20 billion tax cut.

-Abolishes Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $126 billion tax cut.

-Abolishes Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.

-Abolishes Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.

-Abolishes the Obamacare health insurance tax. This is a $145 billion tax cut.

-Abolishes the Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.

-Abolishes the Obamacare medical device tax. This is a $20 billion tax cut.

-Abolishes the Obamacare tax on prescription medicine. This is a $28 billion tax cut.

-Abolishes the Obamacare tax on retiree prescription drug coverage. This is a $2 billion tax cut.

As a presidential candidate in 2008, Barack Obama had promised repeatedly that he would not raise any tax on any American earning less than $250,000 per year. He broke the promise when he signed Obamacare. With the passage of the House GOP bill, tens of millions of middle income Americans will get tax relief from Obamacare's long list of tax hikes.

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AHCA Toolkit

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Posted by John Kartch on Wednesday, March 22nd, 2017, 1:12 PM PERMALINK

Grover Norquist Letter in Support of AHCA 

ATR Statement in Support of AHCA 

Full List of Obamacare Taxes Repealed

How the AHCA Shrinks Federal Spending 

Grover Norquist Washington Examiner op-ed in support of AHCA: A vote against the House Republican healthcare bill is a vote in favor of Obamacare

Norquist on Fox Business Network: AHCA is One of the Most Conservative Pieces of Legislation DC Has Ever Seen 

ATR: AHCA Abolishes Obamacare Chronic Care Tax on Middle Class

ATR: AHCA Abolishes Obamacare’s Medicine Cabinet Tax

Photo Credit: Jocelyn Wallace 

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Two Charts: How the AHCA Shrinks Federal Spending


Posted by John Kartch on Monday, March 20th, 2017, 3:18 PM PERMALINK


-Under the American Health Care Act, by 2021 federal spending on healthcare as a percentage of GDP is reduced from 6.9% to 6.3%. As time goes by, the spending reduction gets larger. See the first chart, below.

-Under AHCA, by 2027 total federal spending as a percentage of GDP is reduced from 23.4% to 22.4%. See the second chart, below.

"In addition to abolishing Obamacare's taxes, the AHCA reduces the total size of government permanently," said Grover Norquist president of Americans for Tax Reform.

 

Chart by Strategas Research Partners using OMB and CBO data


Chart by Strategas Research Partners using CBO data

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Grover Norquist to Robert Reich: You were wrong on welfare reform and you are wrong on Obamacare repeal


Posted by John Kartch on Tuesday, March 14th, 2017, 5:36 PM PERMALINK

On CNN Monday night, ATR president Grover Norquist debated Bill Clinton labor secretary Robert Reich. The topic: Obamacare repeal.

Norquist pointed out that the Trump/GOP Obamacare repeal bill cuts taxes by almost $900 billion and cuts spending by $1.2 trillion. Many of Obamacare¹s tax hikes hit millions of Americans hard in the pocketbook.

Norquist ended the segment by reminding Reich: "Robert, you were wrong about Bill Clinton¹s welfare reform. You are wrong again."

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Obamacare Repeal Bill Cuts Taxes $883 Billion


Posted by John Kartch on Monday, March 13th, 2017, 4:28 PM PERMALINK

AHCA will repeal Obamacare’s tax hikes on tens of millions of middle income families

The American Health Care Act will repeal Obamacare's tax hikes on tens of millions of middle income families. The repeal bill's net tax cut: $883 billion over the next ten years, according to Congressional Budget Office numbers released today.

The repeal bill will abolish Obamacare’s individual and employer mandate tax, abolish numerous taxes on Health Savings Accounts and Flexible Spending Accounts, eliminate the chronic care income tax hike, the health insurance tax, the medical device tax, the tax on prescription medicines, and a raft of other new or higher Obamacare taxes.

“Repealing Obamacare’s taxes will provide much needed relief to the paychecks of families across the country,” said Grover Norquist, president of Americans for Tax Reform. “Repealing Obamacare will also undo Barack Obama’s broken promise not to sign ‘any form of tax increase’ on any American making less than $250,000. Obamacare, from the start, was a trillion-dollar collection of tax hikes with a stethoscope stapled to the top. The CBO, which understated Obamacare's costs and exaggerated its ‘benefits’ now with hindsight can tell us the actual size and scope of the taxes we will now repeal with passage of the AHCA,” said Norquist.

The repeal bill abolishes Obamacare's tax increases:

Individual Mandate Non-Compliance Tax: Under Obamacare, anyone not buying “qualifying” health insurance – as defined by the Obama-era Department of Health and Human Services -- must pay an income surtax to the IRS. In 2015, eight million households paid this tax. Most make less than $250,000. The Obama administration uses the Orwellian phrase “shared responsibility payment” to describe this tax.   

For tax year 2016, the tax is a minimum of $695 for individuals, while families of four have to pay a minimum of $2,085.

 

Households w/ 1 Adult

 

Households w/ 2 Adults

Households w/ 2 Adults & 2 children

 

2.5% AGI/$695

 

2.5% AGI/$1390

2.5% AGI/$2085

A recent analysis by the Congressional Budget Office (CBO) found that repealing this tax would decrease spending by $311 billion over ten years.

Medicine Cabinet Tax on HSAs and FSAs: Under Obamacare, the 20.2 million Americans with a Health Savings Account and the 30 - 35 million covered by a Flexible Spending Account are no longer able to purchase over-the-counter medicines using these pre-tax account funds. Examples include cold, cough, and flu medicine, menstrual cramp relief medication, allergy medicines, and dozens of other common medicine cabinet health items. This tax costs FSA and HSA users $6.7 billion over ten years.

Flexible Spending Account Tax: Under Obamacare, the 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face an Obamacare-imposed cap of $2,500. This tax will hit Americans $32 billion over the next ten years.

Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap. Now, parents looking to sock away extra money to pay for braces find themselves quickly hitting this new cap, meaning they have to pony up some or all of the cost with after-tax dollars. Needless to say, this tax especially impacts middle class families.

There is one group of FSA owners for whom this new cap is particularly cruel and onerous: parents of special needs children.  Families with special needs children often use FSAs to pay for special needs education. Tuition rates at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax increase limits the options available to these families.

Chronic Care Tax: Under Obamacare, this income tax increase directly targets middle class Americans with high medical bills. The tax hits 10 million households every year. Before Obamacare, Americans facing high medical expenses were allowed an income tax deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income. This income tax increase will cost Americans $40 billion over the next ten years.

According to the IRS, approximately 10 million families took advantage of this tax deduction each year before Obamacare. Almost all were middle class: The average taxpayer claiming this deduction earned just over $53,000 annually in 2010. ATR estimates that the average income tax increase for the average family claiming this tax benefit is about $200 - $400 per year.

HSA Withdrawal Tax Hike: Under Obamacare, this provision increases the 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.

Ten Percent Excise Tax on Indoor Tanning: The Obamacare 10 percent tanning tax has wiped out an estimated 10,000 tanning salons, many owned by women. This $800 million Obamacare tax increase was the first to go into effect (July 2010). This petty, burdensome, nanny-state tax affects both the business owner and the end user. Industry estimates show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women. There is no exception granted for those making less than $250,000 meaning it is yet another tax that violates Obama’s “firm pledge” not to raise “any form” of tax on Americans making less than this amount.

Health Insurance Tax: In addition to mandating the purchase of health insurance through the individual mandate tax, Obamacare directly increases the cost of insurance through the health insurance tax. The tax is projected to cost taxpayers – including those in the middle class – $130 billion over the next decade. 

The total revenue this tax collects is set annually by Treasury and is then divided amongst insurers relative to the premiums they collect each year. While it is directly levied on the industry, the costs of the health insurance tax are inevitably passed on to small businesses that provide healthcare to their employees, middle class families through higher premiums, seniors who purchase Medicare advantage coverage, and the poor who rely on Medicaid managed care.

According to the American Action Forum, the Obamacare health insurance tax will increase premiums by up to $5,000 over a decade and will directly impact 1.7 million small businesses, 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs. The tax is also economically destructive – the National Federation for Independent Businesses estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.

Employer Mandate Tax: Under Obamacare, this provision forces employers to pay a $2,000 tax per full time employee if they do not offer “qualifying” – as defined by the government -- health coverage, and at least one employee qualifies for a health tax credit. According to the Congressional Budget Office, the Employer Mandate Tax raises taxes on businesses by $166.9 billion over the ten years.

Surtax on Investment Income: Obamacare created a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 for singles). This created a new top capital gains tax rate of 23.8% and increased taxes by $222.8 billion over ten years.

The capital gains tax hits income that has already been subjected to individual income taxes and is then reinvested in assets that spur new jobs, higher wages, and increased economic growth. Much of the “gains” associated with the capital gains tax is due to inflation and studies have shown that even supposedly modest increases in the capital gains tax have strong negative economic effects.

Payroll Tax Hike: Obamacare imposes an additional 0.9 percent payroll tax on individuals making $200,000 or couples making more than $250,000. This tax increase costs Americans $123 billion over ten years.

Tax on Medical Device Manufacturers: Under Obamacare, this law imposes a new 2.3% excise tax on all sales of medical devices. The tax applies even if the company has no profits in a given year. The tax was paused for tax years 2016 and 2017. Under Obamacare it was scheduled to cost Americans $20 billion by 2025.

Tax on Prescription Medicine: Obamacare imposed a tax on the producers of prescription medicine based on relative share of sales. This is a $29.6 billion tax hike over the next ten years.

Elimination of Deduction for Retiree Prescription Drug Coverage: The elimination of this deduction is a $1.8 billion tax hike over ten years.

$500,000 Annual Executive Compensation Limit for Health Insurance Executives: This deduction limitation is a $600 million tax hike over ten years.

Goodbye Obamacare tax hikes. You will not be missed.

 

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Repeal Bill Abolishes Obamacare’s Medicine Cabinet Tax

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Posted by John Kartch on Monday, March 13th, 2017, 11:24 AM PERMALINK

AHCA provides middle class tax relief for the 30 – 35 million Americans with a Flexible Spending Account and the 20 million Americans with a Health Savings Account

-The Obamacare Medicine Cabinet Tax violated Obama’s middle class tax pledge. Obamacare imposed a $1 trillion tax hike on the American people, and violated President Obama’s own “firm pledge” not to raise any form of tax on any middle class American. One of the most widespread Obamacare taxes is the Medicine Cabinet Tax.

-The Obamacare Medicine Cabinet Tax hits tens of millions of Americans. The Obamacare Medicine Cabinet Tax hits the 20 million Americans with a Health Savings Account and the 30 – 35 million Americans with a Flexible Spending Account.

-Under Obamacare’s Medicine Cabinet Tax, Americans are forbidden from using pre-tax funds to buy over the counter medicines. Examples include cold, cough, and flu medicines, children’s fever relievers, chest rubs, aspirin and baby aspirin, allergy medicines, menstrual cramp relief medication, feminine personal care treatments, and hundreds of other common medicine cabinet necessities.

-The Obamacare Medicine Cabinet Tax is a $6.7 Billion Tax Hike. By forcing Americans with FSAs and HSAs to use post-tax dollars to purchase these necessary items, Obamacare raised taxes on these households by $6.7 billion over a ten year period. 

-The Repeal Bill Abolishes the Obamacare Medicine Cabinet Tax, providing significant tax relief for middle class households. The repeal bill gives HSA and FSA holders the freedom to use pre-tax dollars to purchase over the counter medicines for their household -- cold, cough, and flu medicines, children’s fever relievers, chest rubs, aspirin and baby aspirin, allergy medicines, menstrual cramp relief medication, feminine personal care treatments, hemorrhoid cream, and hundreds of other common medicine cabinet necessities.

“The Obamacare Medicine Cabinet Tax raised the cost of health care, directly hit middle income Americans, and made us worse off,” said Grover Norquist, president of Americans for Tax Reform. “The AHCA repeals Obamacare and ends the Medicine Cabinet Tax once and for all.”

 

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More from Americans for Tax Reform


Keep the Earmark Ban! Norquist Praises Sen. Jeff Flake Letter to President Trump

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Posted by John Kartch on Tuesday, March 7th, 2017, 4:03 PM PERMALINK

Americans for Tax Reform President Grover Norquist today commended Sen. Jeff Flake for spearheading a letter to President Trump urging opposition to any return of congressional earmarks.

“Earmarks are the ‘broken windows’ of federal overspending, the currency of congressional corruption, and the price of bad votes for more spending,” said Norquist. “I commend Sen. Flake for his continued leadership on behalf of the American taxpayer.”

The letter – also signed by Sens. Mike Lee, Ted Cruz, John McCain, Rand Paul, and Ben Sasse -- reads in part:

President Reagan vetoed a highway bill in 1987 because it was larded up with 152 earmarks.  Escalating exponentially, the over-budget transportation bill signed into law in 2005 contained more 6,300 earmarks.  Earmark proponents are trying to reassure that this time will be different, promising fewer projects and even rebranding them as “congressionally-directed spending.”  With the serious fiscal problems facing our nation, processing thousands or even hundreds of pork requests will only distract and delay addressing pressing national needs and push spending decisions once again into the murky shadows.

We respectfully urge you to make it clear that you will veto any bill Congress sends to you containing earmarks within the legislative text or the accompanying report.  We look forward to working with you to make Washington more accountable and stop wasteful spending where it starts, which is often right here in Congress.

The full text of the letter is below and the signed PDF version of the letter is here.

President Donald J. Trump

The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear President Trump,

With our national debt set to top $20 trillion within days and growing at a rate of over half-a-trillion dollars a year, bringing fiscal sanity to the federal budget requires immediate attention and action.  We write today to urge opposition to any efforts by Congress to return to earmarking.

While cutting unnecessary and wasteful spending may be commonsense to most taxpayers, behind every dollar spent is a boisterous special interest group with the loudest being Congress itself.  Even with a full agenda that includes repealing Obamacare, reforming the tax code, easing the regulatory burden and strengthening our nation’s security, some lawmakers are focused on reviving the corrupt practice of earmarking that was ended in 2011 after what seemed like an endless series of corruption scandals.

Fondly described as a “favor factory” by a lobbyist convicted of exchanging gifts for government grants, earmarks represent the pay-to-play culture you have pledged to end.  It is unfathomable to those of us who fought to end earmarks and witnessed our colleagues go to jail for corruption that pork barrel politics would return, especially at this time when Americans are clearly fed up with business-as-usual. However, despite the success of the current moratorium enacted in both chamber of Congress, there are efforts underway seeking to revive the disdainful practice.

President Reagan vetoed a highway bill in 1987 because it was larded up with 152 earmarks.  Escalating exponentially, the over-budget transportation bill signed into law in 2005 contained more 6,300 earmarks.  Earmark proponents are trying to reassure that this time will be different, promising fewer projects and even rebranding them as “congressionally-directed spending.”  With the serious fiscal problems facing our nation, processing thousands or even hundreds of pork requests will only distract and delay addressing pressing national needs and push spending decisions once again into the murky shadows.

We respectfully urge you to make it clear that you will veto any bill Congress sends to you containing earmarks within the legislative text or the accompanying report.  We look forward to working with you to make Washington more accountable and stop wasteful spending where it starts, which is often right here in Congress.

Sincerely,

Jeff Flake

Mike Lee

John McCain

Rand Paul

Ted Cruz

Ben Sasse

Photo Credit: Gage Skidmore

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