Top 5 worst Obamacare taxes to hit in 2013

Top Five Worst Obamacare Taxes Coming in 2013
By Americans for Tax Reform,

Of the twenty new or higher taxes in Obamacare, below are the five worst that will be foisted upon Americans for the first time on January 1, 2013:
.
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:

Capital Gains Dividends Other*
2012 15% 15% 35%
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:

First $200,000
($250,000 Married)
Employer/Employee
All Remaining Wages
Employer/Employee
Current Law 1.45%/1.45%
2.9% self-employed
1.45%/1.45%
2.9% self-employed
Obamacare Tax Hike 1.45%/1.45%
2.9% self-employed
1.45%/2.35%
3.8% self-employed

Click here to view a PDF of this list.

 

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Posted by at 05:05 | Posted in Uncategorized | 4 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    Government in general is too big. As the government forces more money into demand of a product or service, supply doesn’t increase very much but prices increase sharply; leading to bankruptcies and very debilitating resource allocation. Suppliers see a big pocketed buyer in the market, and price is mainly the result. We saw this with the Western electricity crisis of the years 2000 and 2001, when the stupid governor of California (later recalled) opened up the state’s treasury with tens of billions of dollars for the purchase of electricity. Prices went through the roof and bankruptcies imploded the western electricity system. The same thing now is happening with education and healthcare.

    I am hoping cash-only practices are able to survive so as to not leave us too dependent on big government dominated health care systems.

    Small(er) government is beautiful, and in many cases the same is true with business entities (especially the banking system). Most innovation and discovery comes from individual trial and error, and by accident in other cases; not very much advancement actually has come from big concentrated research efforts. Steve Jobs did more for healthcare (one of his many by-products) than 40 plus years of the national cancer research institute (launched by President Nixon). The biggest advances against cancer actually occurred before this cancer institute, and by accident stemming from observations about mustard gas having the affect of killing liquid cancer cells in the bodies of inflicted soldiers of world war I. Chemotherapy is still the main attack.

    Oregon in particular with Kitzhaber’s centralized policies is actually going the wrong way. Right now things look good on paper, and the Federal government is providing specious monies to it; but ultimately, decentralization is the best antidote to our many languishing sectors.

    • 3H

      “Steve Jobs did more for healthcare (one of his many by-products) than 40 plus years of the national cancer research institute (launched by President Nixon).

      Care to explain?

    • thetaxmancometh

      How do you propose to keep business entities and the banking system sufficiently small so as to remain “beautiful” and innovative? Seems like the only way to keep companies from getting too big to fail is through government regulation. Or should the invisible hand do that? Oh wait, it doesn’t.

  • TomDuck

    Can anyone say with certainty whether this medical device tax law will be enacted in 2013?

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