Saturday, June 30, 2012

Obamacare: 21 New or Higher Taxes

Ryan Ellis puts together some important data on the tax impact of Obamacare:


1. Individual Mandate Excise Tax(Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following

1 Adult
2 Adults
3+ Adults
2014
1% AGI/$95
1% AGI/$190
1% AGI/$285
2015
2% AGI/$325
2% AGI/$650
2% AGI/$975
2016 +
2.5% AGI/$695
2.5% AGI/$1390
2.5% AGI/$2085
Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS)

2. Employer Mandate Tax(Jan 2014):  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).
Combined score of individual and employer mandate tax penalty: $65 billion/10 years

3. Surtax on Investment Income ($123 billion/Jan. 2013):  This increase involves the creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single).  This would result in the following top tax rates on investment income

Capital Gains
Dividends
Other*
2010-2012
15%
15%
35%
2013+ (current law)
23.8%
43.4%
43.4%
2013+ (Obama budget)
23.8%
23.8%
43.4%
 
*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens.
 
4. Excise Tax on Comprehensive Health Insurance Plans($32 bil/Jan 2018): 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.

5. Hike in Medicare Payroll Tax($86.8 bil/Jan 2013)

6. Medicine Cabinet Tax($5 bil/Jan 2011): Americans 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)

7. HSA Withdrawal Tax Hike($1.4 bil/Jan 2011): 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.

8. Flexible Spending Account Cap – aka“Special Needs Kids Tax”($13 bil/Jan 2013): 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. (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. 

9. Tax on Medical Device Manufacturers($20 bil/Jan 2013): 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. 

10. Raise "Haircut" for Medical Itemized Deduction from 7.5% to 10% of AGI($15.2 bil/Jan 2013): 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.

11. Tax on Indoor Tanning Services($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons

12. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D($4.5 bil/Jan 2013)

13. Blue Cross/Blue Shield Tax Hike($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services

14. Excise Tax on Charitable Hospitals(Min$/immediate): $50,000 per hospital if they fail to meet new "community health assessment needs," "financial assistance," and "billing and collection" rules set by HHS

15. Tax on Innovator Drug Companies($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

16. Tax on Health Insurers($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. The stipulation phases in gradually until 2018, and is fully-imposed on firms with $50 million in profits.

17. $500,000 Annual Executive Compensation Limit for Health Insurance Executives($0.6 bil/Jan 2013)

18. Employer Reporting of Insurance on W-2(Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.

19. Corporate 1099-MISC Information Reporting($17.1 bil/Jan 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers

20. “Black liquor” tax hike(Tax hike of $23.6 billion).  This is a tax increase on a type of bio-fuel.

21. Codification of the “economic substance doctrine”(Tax hike of $4.5 billion).  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.

(Via  Ryan Ellis and Iris Mack)

44 comments:

  1. What have the surtax on income, the "black liquor and the codification of economic substance as well as the tanning salon tax got to do with "healthcare"? I mean those related to healthcare are bad enough but what's with all these extras?

    inc: masochists/quislings who are thrilled by this.

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    1. These are far reaching taxes that will increase as the cost of Obamacare rises, which it will! Obamacare gives Health & Human Services broad reaching powers to implement regulations & laws without congressional approval and there is nothing they can do about it! Also, remember that there is no law stating that the fed. gov't must spend the money taken in by Obamacare taxes on healthcare, no wonder they rammed it through while they had a super majority in both houses. It was a power grab plain and simple!

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  2. Tatiana CovingtonJune 30, 2012 at 8:29 PM

    And if you refuse, times 200 million? Fuck Obama anyway.

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    1. 231,040,398 to be exact!!

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  3. "9. Tax on Medical Device Manufacturers" My medical device employer eliminated 200 jobs a few months ago as a direct result of the 2.3% excise tax. Incidentally, this tax is on sales, not profits. That means start up medical device companies that are not yet making money will be burdened with this tax.

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  4. The only way that I can conceptualize the mandate penalty "tax" is by classifying it as a direct tax, and not an indirect excise tax, primarily because excise taxes tax action, i.e. buying a good, and the penalty is assessed for inaction, i.e. not buying a good.

    I would be very interested in hearing arguments as to why the tax must be classified as an indirect excise tax.

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    1. Ted, I see it as a Capitation which is prohibited by Article 1, Section 9 and as it is not an income tax is not affected by the 16th Amendment.

      Can you say, "UNCONSTITUTIONAL"?

      When are these organizations going to return to simple "Screen-name and unpublished email address.here are many of us who refuse to join some other organization simply to post a comment with a screen name.

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  5. I am under VA medical care because TriCare doesn't live up to disabled retired obligations. My wife is on Medicaid because of the same and her copays doubled last week. I hope you morons who support this like your government heathcare, it's working great for me. I was denied for 4 years on a major surgery, am pending still on a few more and they gave me liver disease trying to fix combat injuries with medication. You all got what you deserved.

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    1. What did your wife's copay double to? It sounds pretty frightening, but if her copay was $10 and now it is $20, that doesn't seem unreasonable. When did this law go into affect for you, because for most adults, it doesn't go into affect until 2014, so that wouldn't be the reason for your denial of major surgery and liver disease. Please share more information with us.

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    2. @Anonymous, 7/12/12: Obamacare may not go into full effect until 2014, but we prior military who largely depend on Tricare Insurance(Government health insurance for veterans, which we DO pay monthly premiums for)and/or VA benefits have been dealing with poor & worsening medical care for over 2 decades. This IS government-run healtcare, though on a smaller scale than Obamacare. We have had in many instances to purchase supplemental insurances because Tricare & the VA could not accomodate our medical needs because of beaurocratic & regulatory limitation, & because the Tricare (aka Government) beaurocracy is so disfunctional that providers stopped accepting it due to non-payment. It is very common for major surgeries to be postponed or denied for non-active duty veterans & dependents because the Government doesn't want to pay for them, the post-surgery care, therapies, or medical devices. The preferred route of treatment is whatever is cheapest, thought not necessarily most effective or expedient.
      This is why our Anonymous veteran above is against Obamacare...it is nothing more than Tricare on steroids!
      (As for the Medicaid co-pay issue, I have no clue.)

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  6. As I see it the taxageddon looming on capital gains, dividends and "other" is the scariest thing I have seen. Huge sell off in markets in November/December before this takes effect? I know that the decrease in capital equipment investment deductions has taken it's toll on growth. I'm selling a lot of investments before the New Year and going to cash and precious metals and land.

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  7. This is a good thing?

    18. Employer reporting of insurance on W-2. (preamble to taxing health benefits on individual tax returns)

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  8. Well all you Democrats that still bow to the pit should be very happy. Just remember all these taxes and all the rest of what this dictator is doing will on you just the same as the rest of us. You got what you deserve. May he rot in hell for what he is trying to do to this country.

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    Replies
    1. Anonymous, which taxes concern you, and why? I am just curious, because I find it very confusing, but you seem to understand it fully, so thought you could explain to us all why President Obama should rot in Hell because of this healthcare reform.

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    2. I'll tell you why. This idiot is ruining families, lives, and the economy of our country. This is the biggest power grab I have ever witnessed in my entire lifetime. He has done it quietly, one item at a time, trying not to alert us to what he is doing. But he is making a grab for miles and miles of land, all water including rivers, streams, creeks, farm ponds and ditches, marshlands, mountain runoffs, even city and municipality water systems, plus electricity, oil and gas, nuclear power, telephones and all communications, the Internet, science and space exploration, our educational systems, all public roads, highways, public park trails, all health care systems, drug companies, HEALTH INSURANCE, how old you can be and still be a "contributing" citizen to get health care, and worst of all, a government panel to decide for you and your family the method and date of of your death.
      What happened to America, home of free, independent, rugged individuals who stand on their own two feet and manage and monitor their own lives? And who is this guy that he can come up out of nowhere and take over the lives of all Americans? Why isn't he at least telling us who he is? Anonymous, does this answer your question? I hope you are not confused any longer. Most Americans, when they become aware of what this guy has done and is still attempting to do, are shocked and angry. Perhaps you can at least understand the basis for our belief that "he should rot in hell."

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  9. Why would you cap the flex spending accounts at 2500? this only effects individuals with low to moderate income.....

    Why would you tax medical equipment... how does a tax on medical equipment make healthcare more affordable and less limited?

    Why would you tax someone who pays alot of money for health insurance.... isnt obamacare suppose to reward individuals who seek better health coverage?

    why would you raise the medical deduction from 7.5% to 10%..... that is a tax the poor and the middle class....

    In other words.... Obama, without a doubt, has raised taxes on every single American who buys insurance..... which you are now required to do by law or pay a tax.... great...

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  10. overall, it's going to be cheaper to pay the income tax increase than to comply with this absurd tax scam. All this has done, IMHO, is given a shot in the arm to the revolution...NOW EVERYBODY WILL WAKE UP.

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  11. Son now the gov is going to get $1.50 out of ever $1 spent?

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  12. With all the controversy of the tax deliberation blazing in Washington, many Americans are lost on what tax laws have actually been adapted and which ones have been held up. I found this url that discusses which most important tax laws are in effect for the 2012 tax season. This greatly helped me when I was preparing my taxes and I bet others will use as favorably. http://www.tax-defense-network-news.com/2012-laws/

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  13. Getting control of healthcare has been a priority of progressives for decades. Hillary Clinton tried to do it after her husband became president, she and Obama are cut from the same cloth! Obamacare has far reaching power to tax and they will as Obamacare costs increase and they will. You must also remember the gov't has no obligation to spend all the tax money collected from Obamacare on healthcare, that is why costs will rise astronomically and the "middle class" which Obama says he wants to protect, will ultimately pay the cost of Obamacare. It was a power grab plain and simple, no wonder they rammed it through while they had super majorities in both the House & Senate!

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  14. Back home, I don't understand the numbers, so I leave it to tax accountants perth. And now, here it is again. Is there no escaping the tax web?

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  15. My compensation can barely cover health insurance, research and development tax credits, and other insurance that I seem to not have heard of. I wish I can get back to the time when people just hunt for food and sleep.

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  16. There are some ways now to be able to neutralize the company's debt and loss when it comes to the process of production they could incorporate themselves to several firm and agencies that could really help them moderate and control the overall expenses of the company.

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  17. There are a lot of company formation uk alliances that are building a lot of infrastructures that can, in one way or another, contribute to the country. I just hope that the taxes will not skyrocket. My compensation can only do so much. The cost of living here isn't so good, either.

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  18. So, if I understand table 1 (and all this shit requires a PhD) if you make 100K/yr then your "penalty" is 1% of AGI, or less than $1,000?

    Who would be stupid enough to pay for insurance if they cannot be refused at anytime, and only pay a $1,000 penalty if they don't purchase?

    I can't wait to see how many businesses spring up this year teaching workers how to game the system and take home more money by taking advantage of the stupidity of this law.

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  19. And then we wonder why the cost of cozaar is getting higher. Why aren't they repealing this yet?

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  20. These are more than two things more for my small business software to worry about. The government should at least know that people don't just dig money from a shallow grave. We actually work for it with our sweat and blood.

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  21. Good thing I have seen this article. I haven’t checked out the hvut form if the amount of tax that I’ll be paying had become higher or not. If there is an increase, I hope it will be not as double as last year’s increase.

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  22. Based on the novated lease calculator that our company presented to us, even with higher taxes, having a novated lease can have a significance when it comes to tax savings. This is just one of the benefits on the part of us, employee, actually the employer, the government and, the service providers do also benefits on this.

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  23. Either way, this doesn't sound too good. Just the thought of asking for new auditing advice sydney and re-crunching all those numbers is already making my head spin.

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  24. I'm reading some of the forex trading reviews since I want to invest the the little money that's left of me after paying these taxes. It's not crazy to see a glimmer or hope in trading.

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  25. Under the new Obama revised taxes, excise ones for new cars and government cars for sale alike are subject to increased excise taxes. So owning a new car could be more economically taxing and buying a used one could be more rewarding in terms of personal finance.

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  26. If this is the case, then it's high time people get their own vat fraud lawyers in case they get wrongly suspected of evading it.

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  27. As a tencia reseller, these taxes might actually give us lesser commissions. On the brighter side, small to big organizations will definitely use their IT more in order to look over these potential expenses -and that's where we swoop in.

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  28. Arthritis leads - Through our innovative performance-based marketing programs supported by our proprietary and powerful CRM software, we are able to provide your company with unique opportunities to increase your customer base.

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  29. I'm seeing so much of the word, "increase" that it's making my head spin. I sure hope they tone all these down because it's sure to have a drastic - if not adverse - effect on everything from the bills to how your mortgage broker penrith works.

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  30. I don't really know anything about taxes so I just leave them all to my accountant. But if there's one thing I want to be updated of is my capital gains tax uk because I want to work out the gains or losses for my assets.

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  31. I notice some people here who comment here don't understand what taxes, numbers are leave it to cfp certified financial planner when it comes to financial problems they are the one who can help you cheers!

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  32. It is really hard to talk about tax especially when it cause burden to hospitals. I think that everything will be taxed in the future even useless things around us.

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  33. I'm guessing that the changes in taxes will surely affect the way of car loan business.

    Joel Edwards

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  34. Well, I hope these changes in taxes will be beneficial to all. I hate it when it affects my business so that's why I make sure I always get tax legal advice. -Gwyn

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  35. A modest amount of community has sufficient treasury or irrigates goods to allow them to buy possessions form.refinance

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  36. Why would you cap the flex spending accounts at 2500? this only effects individuals with low to moderate income.....

    Why would you tax medical equipment... how does a tax on medical equipment make healthcare more affordable and less limited?

    Why would you tax someone who pays alot of money for health insurance.... isnt obamacare suppose to reward individuals who seek better health coverage?

    why would you raise the medical deduction from 7.5% to 10%..... that is a tax the poor and the middle class....

    In other words.... Obama, without a doubt, has raised taxes on every single American who buys insurance..... which you are now required to do by law or pay a tax.... great...

    ReplyDelete
  37. Well, I hope these changes in taxes will be beneficial to all. I hate it when it affects my business so that's why I make sure I always get tax legal advice.

    ReplyDelete