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Obamacare Tax Hikes

October 8, 2010

I’ve blogged about several of the new taxes and hidden fees in the new health care law, but you should take a look at one of the National Reviews’ most recent posts. It comes in response to a piece in the Kiplinger letters that highlights thirteen tax changes found in Obamacare. Yes, there are a couple of credits for those who enroll in PPACA-sponsored state-based exchanges, but they only apply to businesses with 25 or fewer employees (and yearly wages less than $50,000) and individuals making between $11,000 and $44,000. The problem is that Obamacare will unleash ten tax increases designed to help raise the trillions of dollars necessary to fund the aforementioned subsidies as well as the law's massive Medicaid expansion.

The tax hikes are as follows:

1. 10% tax on indoor tanning services;
2. Eliminate tax deduction for those employers who provide Medicare prescription drug coverage;
3. Increase HSA penalties by 50% to 20%;
4. Cap employer contributions to tax-free FSAs at $2,500. As of now, the “limit” is determined by your business;
5. Prohibit HSA funds from being used to purchase over-the-counter drugs;
6. Medicare surtax for individuals making $200,000 and families earning $250,000, as well as a 3.8% Medicare tax on investment income for these taxpayers;
7. You will have to spend 10% of your income on medical expenses before making itemized deductions. Currently, the starting point is 7.5%;
8. Employer mandate. All businesses with more than 50 employees will have to offer approved health plans or pay a tax of $2,000 per employee;
9. A Cadillac tax will charge high-value plans ($10,200 for individuals and $27,500 for families) a 40% excise tax;
10. Individual mandate. Everyone much purchase health insurance or pay a fee. According to the National Review, it “starts in 2014 at $95 or 1 percent of gross income, whichever is greater; and maxes out in 2016 at the greater of $695 or 2.5 percent of income.”

The 13th change would require employers to disclose health costs on W-2s.

While we have discussed many of these provisions before, I think the National Review provides a nice snapshot of the dire reality we face. We still have a few years before some of these tax hikes kick in and their details are specified, so it’s not too late to push for repeal. If we don’t halt full implementation of Obamacare, or at a minimum defund it, there will be tremendous, unwarranted consequences for American taxpayers.


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Submitted by Robar at: December 7, 2011
I'm confused is Obamacare the same as The Patient Protection and Affordable Care Act? Educate me, please. Give me a break, I smell a rat. And you call your organization a non-partisan advocate for overburdened taxpayers. Go ahead turn America into Greece. Who elected your organization to anything? Lobbyists are no better than an Ayn Rand looter.

Submitted by ANDHOW at: November 29, 2011
As a tax practitioner I don't see too many negatives. Tanning beds lead to down the road medical bills which will probably cost the average taxpayer money from uninsured people. The tax isn't bad Most people don't even come close to the 7.5% medical deduction so the 10% deduction won't hurt very many people. Maybe the ones with no medical insurance. The individual mandate is necessary because in large part we the public pay for the people who have no insurance. They generally are the ones who walk out on the medical bills when something grave happens. No sympathy there. And pity the poor people who make lots of money. God knows that they can't afford to pay a little something extra when it's needed. The disclosure of the health care costs on the w-2 is for information purposes only. No big deal with computer programs already in place. And what happened to 11 and 12?

Submitted by Newbie at: November 14, 2011
I read where NTU reported that Obama plans to "impose a 23% tax on Medicacare Prescription Drug Benefit for low income beneficiaries." It is "rebate" scheme. Can you tell us where that is?

Submitted by Observer_Guy1 at: October 18, 2010
"The 13th change would require employers to disclose health costs on W-2s". We don't currently pay tax on this (or do we). If we don't, won't this increase taxes for everyone who receives a healthcare plan from their employer?

Submitted by newbie at: October 12, 2010
I do admit i'm new to politics, but you must remeber that Obama is a democrat and the democrtic platform is to help the poor even at the expense of the rich. Some of these tax hikes show exactly that. You also have to remeber that unfortunately to conservatives America voted Obama in, I know it feels he made false promises, but he is doing what he said he would do. The way he said he would do things I think was much misunderstood, he's doing what he said in ways we don't like, but he is doing what he said. However, I do believe some of these tax hikes are comprimising the freedom of choice. Unfortunately,m he is change just change that may destroy us