Which Tax Hikes in Senate Health Bill Violate Obama's Tax Promise?


Posted by Ryan Ellis on Wednesday, October 21st, 2009, 1:56 PM PERMALINK

Over and over again, President Obama has promised not to raise “any form” of taxes on families making less than $250,000 per year. Yet, the U.S. Senate is getting ready to consider a government healthcare bill which does just that. Here’s how:

Health Insurance Mandate Taxes on Working Families
 
·        Individual Mandate Excise Tax. Americans who do not sign up for health insurance will have to pay an excise tax in the following range:
 

 
Single
Family
100-300% of Federal Poverty Level
$750
$1500
300+% of Federal Poverty Level
$900
$1900
 
300 percent of the federal poverty line is well under $250,000. For a family of four, it’s $67,000. For an individual, it’s about $30,000.
 
·        Employer Mandate Tax. $400 per employee if health coverage is not offered. Note: this is a huge incentive to drop coverage, as $400 is much less than the average plan cost of $11,000 for families or $5000 for singles (Source: AHIP)
 
Small businesses pay their tax liability on their owners’ 1040 forms. This $400 employer mandate tax does not hold harmless business owners making less than $250,000
 
Tax Hikes on Healthcare Spending Accounts
           
·        Cap on Flex-Spending Account (FSA) contributions at $2500: Currently, the contribution level is unlimited
 
·        Medicine Cabinet Tax : Americans would no longer be able to purchase over-the-counter medicines with their FSA, Health Savings Account (HSA), or Health Reimbursement Arrangement (HRA)
 
·        Increase in the Non-Qualified HSA Distribution Penalty from 10% to 20%: This makes HSAs less attractive, and paves the way for HSA pre-verification
 
There are 30 million Americans with FSAs. About 8 million Americans have an HSA. Virtually all of them make less than $250,000 per year. These are clear tax hike on these families
 
         Denying a Tax Deduction for Medical Costs
 
·        Increase “haircut” of medical itemized deductions from 7.5% to 10% of adjusted gross income (AGI), further denying medical itemized deductions
 
There is no exemption made here for families making less than $250,000 per year.
 
If President Obama is serious about his tax pledge, he should immediately renounce the bill.

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