Throughout the summer, Americans for Tax Reform will be highlighting the most outrageous new powers that the IRS will have under the Obamacare law.  According to a report from GAO, the IRS is tasked with nearly four dozen new powers under that law.  Each day, one will be selected for a brief review.

Power #1: Equal Outcomes Matter

Obamacare requires that everyone in a workforce have the same “quality” health coverage as everyone else. 

Power #2: Profit Cap

Obamacare puts a price control on how much money health care companies can make.  This will result in rationing of health care for all of us.

Power #3: Nosey Uncle Sam

Obamacare says that the IRS and HHS must share personal health ID information about every American participating in Obamacare.

Power #4: Community Organizer Subsidy

The Obamacare law provides for “walking around money” payments to ACORN-like community organizers to sign people up for Obamacare (and likely to vote).

Power #5: Free Money for Insurance Companies

The IRS will be giving every insurance company in America money to help people pay for Obamacare insurance.  What happens if the IRS gives them too much money?  You have to pay the IRS back.

Power #6: Your Life in His Hands

Bureaucrats at the IRS and HHS will determine whether you must get Obamacare health insurance, what kind you can get, and what you will pay.

Power #7: Red Tape Tax Credit

Obamacare creates a tax credit for small employers to comply with Obamacare.  There’s only one problem-the tax credit is so complex, the IRS and CBO report that no one is using it.

Power #8: Individual Mandate

This is the most famous part of Obamacare. Most every American will be required to purchase “qualifying” health insurance.  Failure to do so will result in a hefty surtax payable to the IRS.

Power #9: Personal Info Disclosure

Your personal health ID info will have to be disclosed from your insurance company to the IRS.  You are also going to have to disclose your personal health ID info to the IRS.

Power #10: 28 Hour Work Week

Obamacare imposes a costly mandate on employers, too.  In order to avoid being sucked into the Obamacare net, many employers are restricting the average work week to less than 30 hours.

Power #11: Thought Crime Tax

If you claim a tax deduction or credit and the IRS thinks you did so merely to reduce your tax liability (Heaven forfend), the IRS is empowered under Obamacare to disallow your perfectly-legal tax strategy.

Power #12: Medicare Cuts

The IRS has to tell the Medicare program how much income current seniors make.  The reason?  So current seniors can face a Medicare benefit cut and pay more for their prescription medicines.

Power #13: Ivory Tower Subsidy

Obamacare provides a tax-free grant to pointy-headed intellectuals to study health care.

Power #14: 40% Tax on Health Insurance

Obamacare imposes a new 40 percent excise tax on high cost or “Cadillac” health insurance plans, effective in 2018. This tax increase will most directly affect union families and early retirees, who are likely to be covered by such plans. 

Power #15: Medicine Cabinet Tax

Thanks to Obamacare, you can no longer buy non-prescription, over-the-counter medicines with your health savings account (HSA) or workplace flex account (FSA).

Power #16: HSA Seizures

Obamacare raises the surtax on non-health HSA withdrawals from 10% to 20%.  As a result, a non-health withdrawal from an HSA could carry an effective tax rate of over 60%.

Power #17: Special Needs Kids Tax

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 a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.) Now, a parent looking to sock away extra money to pay for their family’s medical needs will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars. 

Obamacare imposes, for the first time, a $2500 cap on annual workplace flex account (FSA) deferrals. 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 the United 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

Power #18: Charitable Hospital Tax

Obamacare imposes a new tax on the work of charitable hospitals.

Power #19: Pill Tax

American manufacturers of prescription medicines will have to pay a new tax to the IRS based on how many life-saving medicines they sold.

After totaling all unreimbursed, out-of-pocket medical expenses, the taxpayer must then subtract from this figure an amount equal to 7.5 percent of the taxpayer's adjusted gross income (AGI). This subtraction amount is known commonly as a "haircut."

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. They deducted $80 billion in medical expenses after applying the “haircut.” The Office of Management and Budget reports that this tax deduction saves these taxpayers upwards of $10 billion annually.

The Obamacare law made one change to this tax provision: it raised the "haircut" from 7.5 percent of AGI to 10 percent of AGI. Since virtually all taxpayers claiming this income tax deduction make less than $200,000 per year, the income tax hike falls almost exclusively on the middle class:

-Virtually every family taking this deduction made less than $200,000 in 2009. Over 90 percent earned less than $100,000.

-The average taxpayer claiming this deduction earns just over $53,000 annually.

-ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 – $400 per year.

-This income tax increase is focused on families with the largest medical bills that weren't covered by insurance. So the target population is low-and middle-income families with debilitating medical costs. That's a good definition of the opposite of “affordable” or “caring.”

According to the Joint Tax Committee, this tax increase is scheduled to raise between $2 billion and $3 billion annually. That may be a drop in the bucket in Washington DC, but try telling that to the $53,000 family with high medical bills that just saw a tax increase.

The tax is a clear violation of President Obama's "firm pledge" in 2008 to not enact "any form of tax increase" on these families.

Power #20: Payroll Tax Hike


Obamacare raises the top Medicare payroll tax rate from 2.9% to 3.8%.

This Obamacare tax increase has the distinction of being the first to go into effect (July 2010). Slipped into the bill by Sen. Harry Reid (D-Nev.) behind closed doors in the middle of the night, this tax hike replaced the planned Obamacare "Botax" on cosmetic surgery.

This petty, burdensome, nanny-state tax affects both the business owner and the end user.  Industry estimates from the Indoor Tanning Association 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.

Making matters worse: According to a Treasury Inspector General for Tax Administration report, the Obama IRS didn't bother to issue compliance guidelines until three quarterly filing deadlines had passed:  "By the time [IRS] notices were issued, tanning excise tax returns had been due for three quarters." This is yet another sign that the Obama administration is ill-prepared for Obamacare implementation.

Power #23: Slacker Mandate

Obamacare says that health insurance companies are forced to cover “children” up to age 26.  Like Peter Pan, Jay and Silent Bob never have to grow up.

Power #24: Saver Surtax

Obamacare imposes a 3.8% surtax on investment income for super-saver families.  As a result, the top capital gains and dividends rate is now nearly 24%.

Power #25: Medical Device Tax

Manufacturers of medical devices like pacemakers, crutches, and prosthetics face a new 2.3% gross receipts tax under Obamacare.  That means they have to pay the tax even in a year where they lose money.