Our dear, departed leader, Nikita Khrushchev was correct when he said, “America will destroy itself from the inside.”
Now that the Supreme Court of The United States (SCOTUS) has spoken saying what is commonly referred to as “Obama-care,” is constitutional since Congress has the right to impose taxes on citizens, it’s time to see what sort of tax is in the bill. Joyfully, the Patient Protection and Affordable Care Act (PPACA) includes 20 new and/or higher taxes on American families and small businesses.
These took effect last year:
1. Medicine Cabinet Tax: Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement account (HRA) pre-tax dollars to buy non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959.
2. HSA Withdrawal Tax Hike: Increases more tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantages them relative to IRAs and other tax-advantaged accounts, which stay at 10 percent. PPACA; Page: 1,959.
These are taking effect this year:
3. Excise Tax on Charitable Hospitals: $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial help,” and “billing and collection” rules set by HHS. PPACA; Page: 1,961-1,971.
4. Codification of the “economic substance doctrine.” This provision allows the IRS to disallow legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to cut taxes owed. Reconciliation Act; Page: 108-113.
5. Cellulosic Biofuel Producer tax hike. This is a tax increase on a type of bio-fuel made from wood byproducts. Reconciliation Act; Page: 105
6. Tax on Innovator Drug Companies: $2.3 billion annual tax on the industry imposed on a share of sales made that year. PPACA; Page: 1,971-1,980.
7. Blue Cross/Blue Shield Tax Hike: The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues spent on clinical services. PPACA; Page: 2,004.
8. Tax on Indoor Tanning Services: New 10 percent excise tax on Americans using indoor tanning salons. PPACA; Page: 2,397-2,399.
9. Employer Reporting of Insurance on W-2: Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957.
These take effect in 2013:
10. Surtax on Investment Income: Creation of a new, 3.8 percent 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: Bill: Reconciliation Act; Page: 87-93.
2012 Capital gains: 15-percent, Dividends: 15-percent; *Other: 35-percent.
2013+ Capital gains: 23.8-percent, Dividends: 43.4-percent; *Other: 43.4-percent.
*Other unearned income includes gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8-percent surtax does not apply to non-resident aliens.
11. Hike in Medicare Payroll Tax: Current law and changes: First $200,000 for a single individual or $250,000 if married. PPACA, Reconciliation Act; Page: 2000-2003; 87-93.
12. Tax on Medical Device Manufacturers: Medical device manufacturers who employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3 percent excise tax and exempts items retailing for less than $100. PPACA; Page: 1,980-1,986.
13. Raises Medical Itemized Deduction from 7.5-percent to 10-percent of Adjusted Gross Income (AGI): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of AGI. The new provision imposes a threshold of 10 percent of AGI, which is waived for taxpayers 65 years and old in 2013-2016 only. PPACA; Page: 1,994-1,995.
14. Flexible Spending Account Cap – aka “Special Needs Kids Tax”: Imposes cap on FSAs of $2500 (now unlimited). This is indexed to meet inflation after 2013. PPACA; Page: 2,388-2,389.
15. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D. PPACA; Page: 1,994.
16. $500,000 Annual Executive Compensation Limit for Health Insurance Executives. PPACA; Page: 1,995-2,000.
These take effect in 2014:
17. Individual Mandate Excise Tax: Starting in 2014, anyone not buying a qualifying health insurance plan must pay income surtax according to the higher of the following:
2014: 1 Adult: 1-percent AGI/$95; 2 Adults: 1-percent AGI/$190; 3 or more Adults: 1-percent AGI/$285.
2015: 1 Adult: 2-percent AGI/$325; 2 Adults: 2-percent AGI/$650; 3 or more Adults: 2-percent AGI/$975.
2016+: 1 Adult: 2.5-percent AGI $695; 2 Adults: 2.5-percent AGI/$1390; 3 or more Adults: 2.5-percent AGI/$2085.
Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and/or hardship cases as determined by HHS. PPACA; Page: 317-337.
18. Employer Mandate Tax: If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. This applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee or $600 if the period is 60 days or longer. PPACA; Page: 345-346.
19. Tax on Health Insurers: Annual tax on the industry imposed relative to health insurance premiums collected that year. This will be phased in gradually through 2018. This is immediately and fully-imposed on firms with $50 million in profits. PPACA; Page: 1,986-1,993.
This one takes effect in 2018:
19. Excise Tax on Comprehensive Health Insurance Plans: Starting in 2018, a new 40 percent excise tax on health insurance plans of $10,200 for one person or $27,500 per family. This includes higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. This is based on collateral protection insurance, plus a one-percent point index. PPACA; Page: 1,941-1,956.
Fortunately the SCOTUS failed to address the fact these new taxes — as the Justices referenced them – originated from the Senate and not the House of Representatives as the U.S. Constitution requires. Nor did they review the fact the same document says taxes are to be raised for the “expressed purposes of creating revenue,” not as a punishment for failing to purchase a qualifying insurance policy.
Americans have lost even more of their rights with this ruling and do not yet know it, with that said, Socialist everywhere can rejoice. But be warned — the battle has jus’ begun for the control of freedom-loving peoples everywhere.
Do not forget to send a note of thanks to Chief Justice John Roberts for turning this into a victory for us by changing the argument from “Interstate Commerce,” to a federal taxation issue. He’s simply brilliant!