Amongst numerous other reasons to oppose the new healthcare reform law, a sharp tax increase can be added to the list.
Yet, I thought Obama stated time and time again, that there would be no new taxes for families making less than $250,000 a year? Perhaps he never read the 2000+ health care bill, wouldn’t surprise me- a majority of our Representatives who supported it did not read it either.
Let’s take a closer look into the bill and see what type of new taxes or elimination of current taxes (which, by default, would raise our taxes) which will households that fall well under the $250,00 mark.
1. Individual Mandate Excise Tax
Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax ranging from $95-1390 or 2.5% AGI.
2. Employer Mandate Tax
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. This provision 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).
3. Surtax on Investment Income
This increase involves the creation of a new 3.8% surtax on investment income earned in households making at least $250,000 ($200,000 single).
3. Excise Tax on Comprehensive Health Insurance Plans
Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family). CPI +1 percentage point indexed.
4. Hike in Medicare Payroll Tax
1.45% raised to 2.35% and for self employed- the tax increases from 2.9% to 3.8%.
5. Medicine Cabinet Tax.
Americans will be 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)
6. HSA Withdrawal Tax Hike
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.
7. Flexible Spending Account Cap (aka Speak Needs Kids Tax)
Imposes cap of $2500 (Indexed to inflation after 2013) on FSAs (now unlimited). . 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. can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
8. Tax on Medical Device Manufactuers
Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exemptions include items retailing for less than $100.
9. Raise Medical Itemized Deduction from 7.5% to 10% of AGI.
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; it is waived for 65+ taxpayers in 2013-2016 only.
9. Tax on Indoor Tanning Services.
10 percent excise tax on Americans using indoor tanning salons.
10. Elimination of tax deduction for employer-provided retirement prescription drug coverage.
11. Excise Tax on Charitable Hospitals.
$50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS.
12. Corporate 1099 Information Reporting.
Requires businesses to send 1099 forms to IRS any work you that exceed $600 which will result in a multitude of paperwork hurting small businesses.
13. “Black liquor” tax hike.
This is a tax increase on a type of bio-fuel.
14. Real Estate Tax
3.8% tax on the sale of real estate starting in 2013.
14. Codification of the “economic substance doctrine”.
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.
The Good news is, according to the Tax Payer Protection Pledge, we should be able to count on at least 41 Senators voting to repeal this health care law. That is, if Senatory Harry Reid doesnt buck the voice of the American people and prohibit the repeal from being discussed on the Senate floor.
Copyright (c) January 20, 2011. All rights reserved.