If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat.
If you get too cold I’ll tax the heat,
If you take a walk, I’ll tax your feet.
– The Beatles
Thought you’d escape a tax hike because you make less that $400,000 per year? think again.
From John C. Goodman, CEO from the Dallas based National Center for Policy Analysis:
Here is a brief summary of the taxes that will kick in next month, courtesy of Americans for Tax Reform.
Medical device tax: $20 billion. This 2.3% tax on gross sales could amount to a very large percent of after tax profit ? thus encouraging an industry that is providing very good domestic jobs to relocate overseas. Meanwhile, the burden of the tax will be reflected in higher prices for anyone who needs an artificial knee or hip or a pacemaker.
Flexible Spending Account (FSA) limits: $13 billion. Roughly 35 million Americans use FSA accounts to pay medical expenses not paid by the employer’s health insurance with pre-tax dollars. These accounts are especially important to chronic patients with substantial out-of-pocket drug expenses. FSAs can also be used to pay for day care and services for special needs children. Currently, there is no legal limit on how much an employee can deposit in the account, but many employers cap the annual contribution at $5,000. After January 1, however, contributions will be limited to $2,500 ? effectively cutting the tax advantage in half.
Surtax on investment income: $123 billion. Democrats often say they merely want to return to Clinton era tax rates for the highest-income taxpayers. They conveniently omit the fact that ObamaCare adds 3.8 percentage points to those rates ? bringing the highest marginal tax rate up to 43.4% for individuals making more than $200,000 and couples earning above $250,000. Add on a 13% state tax in California, and some taxpayers will be paying more than half of all they earn to the government. The new tax hits dividends, capital gains and other investment income.
Limits on itemized medical expense deductions: $15.2 billion. Currently, people can deduct medical expenses in excess of 7.5% of income if they itemize. Next year, that threshold will rise to 10%. This means a higher tax burden for those who have the misfortune to have large medical bills. It is literally a tax on the sick.
Higher payroll tax: $86.8 billion. The Medicare payroll tax is currently 2.9% on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 for a couple) will face a 3.8% rate instead. This is a direct tax hike for small business owners, who are liable for self-employment taxes in most cases.
A solution? Goodman and his colleagues at the NCPA have a reasonable, revenue-neutral proposal: push back the start date of the five new ObamaCare taxes and pay for that by pushing back the start date of ObamaCare.
See John Goodman’s article http://healthblog.ncpa.org/fiscal-cliff-who-won-who-lost/.