Monday, October 04, 2010

Obamacare Delivers Silent Tax Increases

[Welcome NRO readers!]

The Patient Protection and Unaffordable Care Act (Obamacrap) is delivering silent tax increases to fund this mess. In truth, the $1 trillion law is a giant tax increase and that figure doesn't include hidden taxes or those that will follow at the state level to fund Medicaid coverage for roughly 15 million people over the next few years.

The snake oil peddlers sold the public on the idea that their elixir would cure all your ailments.

The folks at Kiplinger report "13 Tax Changes are on the Way". Sounds like politician speak.

Tax changes.

Not tax increases, changes.

Tax number 1 on tanning services is obvious. Unless you are John Boehner it probably doesn't affect you.

Tax number 2, a small business tax credit sounds nice but very few companies will actually qualify. Even left wing NPR acknowledged few businesses will ever see a dime of the tax credit.

Most of the taxes listed in Kiplinger numbered 4 - 13 are sneaky unless you think about them.

Elimination of a deduction employers now take for providing Medicare Part D prescription drug coverage to their retirees to the extent that the federal government subsidizes the coverage

Doesn't sound like much but it is. Many large employers have already announced they will be dropping the Part D benefit for retirees. When that happens, those who want to continue Part D coverage must secure coverage from the few health insurance companies that are still offering the plan.

While not a direct tax, it does mean retirees will have to use their own money (which for many is limited any way) to purchase coverage on their own. Factor in the closing of the donut hole in Medicare Part D which will result in higher premiums for Part D, seniors get a double whammy.

Corporations that drop that benefit will pay more in taxes unless they find another write off.

6. A limit on the amount that employees can contribute to health care flexible spending accounts to $2,500 a year, but the cap won’t take effect until 2013. This was previously left to the employer's discretion, with many firms choosing a limit of $4,000 to $5,000 or so

7. A ban on using funds from flexible spending accounts, health reimbursement arrangements or health savings accounts for the cost of over-the-counter medications, starting in 2011.

If you have an FSA or HSA the new limits mean you can shelter less income from taxation. The result is higher taxes. Item number 7 fails to inform readers they can still use FSA/HSA/HRA funds to pay for OTC meds but only if they have a doctors prescription.

That means a trip to the doc that is a hidden tax because it is money you would not have spent if not for Obamacrap.

Beginning in 2013 if you don't have health insurance and/or and HRA/HSA/FSA to cover out of pocket medical expenses you will have to spend 10% of your AGI before you can claim a partial write off on Schedule A of your income tax form.

10. A new 40% excise tax, beginning in 2018, on high-cost health plans, levied on the portion that exceeds $10,200 for individuals and $27,500 for families. The provision is aimed mostly at gold-plated plans offered by employers, although it can affect individual policies

11. A new tax on individuals who don't obtain adequate health coverage by 2014 -- this is often referred to as the individual mandate.. The tax is to be phased in over three years, starting at the greater of $95, or 1% of income, in 2014, and rising to the greater of $695, or 2.5% of gross income, in 2016.

This is what you call damned if you do, damned if you don't.

If you purchase health insurance that meets Obamacrap guidelines most everyone will be subject to the 40% excise tax, but if you don't buy health insurance you will pay a tax.

They've got you coming or going.

A tax Kiplinger missed is the one imposed on anyone in business that spends more than $600 with a vendor in 2011 and later. Business owners are required to generate a 1099 for any vendor where they purchase more than $600 in goods or services. That means if you own a business and buy more than $600 in gasoline, electricity, telephone, internet, cell phone, natural gas or water you must generate a 1099 for those businesses. Buy more than $600 from Office Depot or Staples?

Generate a 1099.

Do you pay a cleaning service to empty the trash in your business? Pay a landscaper? Provide a coffee service for employees and guests?

1099. 1099, 1099.

It will cost you money to generate those 1099's. Money that could have been used to create jobs.

This is one of the most ill conceived pieces of legislation to come down the pike in a long time and it is a jobs killer that will further stall the recovery.

Just another stupid government trick from the folks who gave us Government Motors.

blog comments powered by Disqus