The whole country’s ablaze over the impending fiscal cliff, which, as the President summarily rejects GOP proposals (so much for bipartisanship and working across the aisle, right Mr. President? That campaign rhetoric becomes awfully inconvenient post-election), looks to be more and more the reality we will have to face. This is the topic of much debate both in the political and punditry worlds, yet as Stuart Varney pointed out yesterday morning, there’s a significant hike in taxes coming down the pike that has nothing to do with Congress’ current fight. Obamacare, sadly, is a done deal, thanks to the Democrats ramming it through with not ONE GOP vote, and later to Supreme Court Justice John Roberts, the Benedict Arnold conundrum all of us have YET to figure out. And since repealing it isn’t happening anytime soon (let’s face it- if ever), we get to eat the cake that our illiterate (that isn’t my word- rather, Pravda’s word) populous baked.
Barring the Mayan calendar’s so-called “end-of-the-world” prediction coming true, here’s what you can expect when you awake, groggy and spent from a long evening of New Year’s Eve festivities, on January 1st, 2013: (courtesy of Americans for Tax Reform)
The Obamacare Medical Device Tax – a $20 billion tax increase: Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales – even if the company does not earn a profit in a given year. In addition to killing small business jobs and impacting research and development budgets, this will increase the cost of your health care – making everything from pacemakers to prosthetics more expensive.
The Obamacare “Special Needs Kids Tax” – a $13 billion tax increase: The 30-35 million Americans who use a Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2,500 (currently the accounts are unlimited under federal law, though employers are allowed to set a cap).
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 several million 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. This Obamacare tax provision will limit the options available to these families.
The Obamacare Surtax on Investment Income – a $123 billion tax increase: This is a new, 3.8 percentage point 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:
|2013+ (current law)||23.8%||43.4%||43.4%|
The table above also incorporates the scheduled hike in the capital gains rate from 15 to 20 percent, and the scheduled hike in dividends rate from 15 to 39.6 percent.
The Obamacare “Haircut” for Medical Itemized Deductions – a $15.2 billion tax increase: Currently, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). This tax increase imposes a threshold of 10 percent of AGI. By limiting this deduction, Obamacare widens the net of taxable income for the sickest Americans. This tax provision will most harm near retirees and those with modest incomes but high medical bills.
The Obamacare Medicare Payroll Tax Hike — an $86.8 billion tax increase: The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate instead. This is a direct marginal income tax hike on small business owners, who are liable for self-employment tax in most cases. The table below compares current law vs. the Obamacare Medicare Payroll Tax Hike:
|All Remaining Wages
|Obamacare Tax Hike||1.45%/1.45%
And that’s just January, 2013. That’s just FIVE of the 18 new tax burdens imposed upon the American public courtesy of Obamacare. The Heritage Foundation has put together a particularly helpful chart:
Not only will these tax increases effect the economy negatively as tax increases typically do, it won’t even come CLOSE to paying for this monstrosity. Obamacare is projected to cost 2.6 trillion dollars. 500 billion isn’t even going to put a ding it in.
Heritage has also been kind enough to put up an interactive map of exactly how much Obamacare + the impending hike in tax rates will mean for the average family, by state. Lucky me, my family and I will be slammed, on average, with a $3,297.00/yr tax increase. That’s approximately $274.00 a month. That of course doesn’t count the rise in health care premiums, (mine have nearly doubled) or the loss of insurance some are facing (meaning a higher cost to be shouldered by the individual) because it is now cheaper for employers to pay the federal fee for not providing insurance than it is to insure their employees.
I ask our dear President- what of your promises?
Well, that went out the window 500 billion dollars ago.
Let’s try this one: “I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family’s premium by up to $2,500 a year.”
What? What’s this? The average family’s health insurance premium has actually gone UP by $2,730 a year? Aw shucks. That’s inconvenient.
I’d go on, but I’ve got to get back to watching House Speaker John Boehner stand up for the fiscal conservatives in Congress. Oh wait. . . .