In
2012 the U.S. Supreme Court ruled that ObamaCare was legal basically because it
was a tax bill. Whether you agree with
them or not, you can’t argue that ObamaCare and its 20+ new or increased tax
provisions won’t raise taxes for many taxpayers. These tax provisions are phased in from 2010
(with its 10 percent “tanning tax”) to 2018, when the tax on comprehensive health
insurance plans kicks in.
The
following five major ObamaCare tax provisions start in 2013:
- The ObamaCare
Medicare Payroll Tax increase (estimated to increase taxes by at least $317
billion over the next 10 years). It
increases the Medicare tax from 2.9 percent to 3.8 percent for couples earning
more than $250,000 a year ($200,000 for single filers). For the first time, the increased Medicare
tax also applies to investment income. - The ObamaCare
Medical Device Tax (estimated to increase taxes by $29 billion over the next 10
years).
This 2.3 percent tax on medical device
makers will raise the price of every pacemaker, prosthetic limb, stent,
operating table, wheelchair, etc. I wish
someone would explain to me how taxing medical devices will lower health costs? As the Heritage Foundation says, this tax is
particularly destructive because it is levied on gross sales, and even applies
to companies that haven’t started turning a profit yet. - The ObamaCare
High Medical Bills Tax (estimated to increase taxes by $18 billion over the
next 10 years). This tax will hit middle-income taxpayers
with high medical expenses particularly hard in years when they have a serious
illness. Currently taxpayers who itemize
can deduct medical expenses that exceed 7.5 percent of their income. Starting in 2013, they can only deduct costs
that exceed 10 percent of their income. - The ObamaCare
Flexible Spending Account cap (estimated to increase taxes by $24 billion over
the next 10 years).
Over 24 million Americans take advantage
of flexible spending accounts that allow them to deduct contributions to a
savings account that can be used to pay for deductible medical expenses now or
in the future. Contributions in 2012 had
no limit, although most employers had an unofficial $5,000 limit. - The ObamaCare
Surtax on Investment Income (estimated to increase taxes by $123 billion over
the next 10 years).
Under current law, the capital gains
rate for all taxpayers rises from 15 percent to 20 percent in 2013. The top dividend rate increases from 15
percent to 39.6 percent in 2013. The new
ObamaCare surtax increases the top capital gains rate to 23.8 percent and the
top dividends rate to 43.4 percent. This
won’t help increase investments in businesses that are planning on expanding
and adding jobs.
The
Heritage Foundation summed up these tax increases perfectly:
“As
you can understand, there is a reason why the authors of ObamaCare wrote the
law in a way that the most brutal tax increases take effect conveniently after
the 2012 election. It’s the same reason
President Obama, congressional Democrats, and the mainstream media conveniently
neglect to mention these taxes and prefer that you simply “move on” after the
Supreme Court ruling.”
You
may or may not agree with their sentiment, but it really doesn’t matter! All of us will now have to live with these
tax increases and must plan our future actions accordingly. We will discuss how to cut your taxes and
insurance costs under ObamaCare in future issues.