Obama Tax Hikes – Not Just for the Rich
In yesterday’s post, I discussed the tax cuts that President Obama mentioned in his State of the Union Address. As I mentioned in that post, President Obama’s statement that he hasn’t raised income taxes by a single dime on a single person is technically true, one can’t ignore the fact that his administration is working diligently to increase taxes all over the board. We have been hearing about the massive healthcare bill for months now, and both the Senate and House versions of that bill call for income tax increases.
I had originally thought that I would just list the proposals that have been discussed by the Obama administration, but upon diving deeper, I realize that the list is too extensive to compile and too cumbersome to maintain. I will try to direct you to different list and resources that have complied a partial list of these proposed tax increases.
First off, we have to look at the healthcare bill. Ryan Ellis from Americans for Tax Reform constructed a list of the major tax increases in the proposed healthcare bills. Several of the bigger provisions revolve around an Individual Mandate Tax. In essence, the bill takes away one’s freedom to choose not to buy health insurance. If you don’t buy it, they will slap you with a fine. The larger your family, the larger the fine. By 2016, the tax will amount to an additional $495 or 2% of adjusted gross income (higher of the two, of course). A family of three or more would get nailed with a fine of the greater of $1,485 or 2% of adjusted gross income. OUCH! That is quite a hefty fine for a low income family that is already struggling to get by.
The news just gets better for business owners. If an employer with 50 or more employees does not offer health coverage for employees and at least one employee is eligible for the health tax credit, the employer gets slammed with an additional non-deductible tax of $750 for every full-time employee. Since the minimum employee size is 50, the minimum amount of tax a business will get hit with is a whopping $37,500 – a brutal fine to pay for many businesses that are already struggling to turn a profit. To make things worse, it isn’t tax deductible as other employer payroll taxes are. In addition, if a business requires a waiting period for employees to go onto the health plan they get slammed hard again. For a waiting period of 30-60 days, they get hit with an additional $400 tax per employee. If that waiting period is 60 days or longer, they get nailed again.
The partial list of backdoor tax increases in the health bill goes on and on. Here are just a few more of the other “tricks” in the bill to get more money from the middle class.
Excise Tax on Comprehensive Health Insurance Plans
Removal of Non-prescription/over-the counter medicine from the list of allowable expenses to be paid by health savings accounts, flexible spending accounts, or health reimbursement plans.
Increase additional tax on non-medical early withdrawals from an HSA from 10% to 20%
Capping the amount that individuals can put into a Flexible Spending Account at a meager $2,500. Currently, this amount is unlimited.
Excise Taxes on Charitable Hospitals.
Tax on Innovator Drug Companies, Medical Device Manufacturers, Health Insurers
Removal of Tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D
Increase the threshold for deducting Medical Expenses from 7.5% of AGI (current) to 10% of AGI
Hike in Medicare Payroll Taxes
Blue Cross/Blue Shield Tax Hike
Tax on Indoor Tanning Services
The Obama tax train is not stopping at healthcare. There have been a whole host of taxes that have been proposed to help may for the massive amounts of new spending that is planned. David Boaz of the Cato Institute has compiled an extensive list of taxes that President Obama and his allies were trying to impose.
The largest proposed tax increase is the cap and trade levy that is proposed. The Congressional Budget Office reports that cap-and-trade would cost the average household roughly $1,600 per year. The Wall Street Journal reports that “while cap-and-trade rises with income, the relative burden is greatest for low-income households.” This is because low income families spend a much higher percentage (20%) of their income on energy intensive items, while high income earners spend less than 5% of their income on energy intensive items.
The list goes on and on…here are a few of my “favorite” taxes from David Boaz’s list:
Applying the Medicare Tax to capital gains, and other “unearned” income
Raising the Medicare Tax Rate
Raising the top income tax rates
Impose a value-added tax (VAT) on all goods and services (this would be a monstrous tax increase and would hit everyone.
Raising the Social Security Tax
Impose higher taxes on cigarettes, beer, wine, liquor, and now soda.
As you can see, the myth that President Obama is a tax cutter is very much busted. His administration has been working as hard as they can to enact these taxes in an effort to pay for the massive spending increases and the record deficits that they are creating. Since they are not going to truly cut government spending, the money has to come from somewhere. Unfortunately, we can no longer afford it.