TAX TAX AND MORE TAX or Did anybody read this thing?

Today I thought I would post the new taxes required to pay part of the cost of the new healthcare act.  Keep in mind that for most of us the health care act will provide a high cost all encompassing plan covering that which  federal government thinks is appropriate for everyone.  The only variability is the deductible.  The bronze plan generally has a $5,000 deductible and on the average costs $600 per month per person.  Whether the taxpayer pays all or part of these costs for those with less than $45K income per year or whether the individual pays them, the cost is the same.  Also there is no organization that checks the validity of the input information.  Not even SSN's are checked according to the Navigators interviewed in a recent sting.  This means anyone world wide can buy the plan, fake the income numbers, lie about citizenship, and have the insurance company pay the provider directly all on your tax dollar.  Illegal aliens need not become citizens  to get Obamacare.  The fed has carefully scoped out enforcement to make it available to anyone.  All they need do is lie and they get it.  And the Navigators teach them how to lie.  A couple posts ago I wrote about what deductions are no longer available thanks to the Affordable Care Act.  This post is a list of taxes that are now or that will be imposed in 2014.  I don't know about you but the plan seems to give affordability to only those who have no earnings.  Those who do will find it not affordable.  They will be paying more tax, getting fewer deductions, and getting insurance that doesn't fit their situation for a much higher price than they were paying.  Clearly this ACA is only good for those who don't work or who are not citizens.  Also one thing that is not shown in any report I have read is the cost of complying with the ACA rules.  How many government workers, IRS agents, accountants in the insurance industry, corresponding people in you company etc.  From the look of it the cost of compliance will add maybe 140% to the medical insurance overhead and that provides absolutely no medical care for anyone. It is simply heat. Anyhow here are the new taxes and reported by Americans for Tax Reform:  I vetted the cites and they are correct.  Enjoy.

Full List of Obamacare Tax Hikes: Listed by Size of Tax Hike

Complied by Americans for Tax Reform
WASHINGTON, DC -- Obamacare contains 20 new or higher taxes on American families and small businesses. Arranged by their respective sizes according to CBO scores, below is the total list of all $500 billion-plus in tax hikes (over the next ten years) in Obamacare, their effective dates, and where to find them in the bill.
$123 Billion: Surtax on Investment Income (Takes effect Jan. 2013): 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:

	Capital Gains	Dividends	Other*
2012	15%	15%	35%
2013+	23.8%	43.4%	43.4%

 

*Other unearned income includes (for surtax purposes) 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% surtax does not apply to non-resident aliens. (Bill: Reconciliation Act; Page: 87-93)
$86 Billion: Hike in Medicare Payroll Tax (Takes effect Jan. 2013): Current law and changes:

	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

 

Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93

 

$65 Billion: Individual Mandate Excise Tax and Employer Mandate Tax (Both taxes take effect Jan. 2014):
Individual: Anyone not buying “qualifying” health insurance as defined by Obama-appointed HHS bureaucrats must pay an income surtax according to the higher of the following

	1 Adult	2 Adults	3+ Adults
2014	1% AGI/$95	1% AGI/$190	1% AGI/$285
2015	2% AGI/$325	2% AGI/$650	2% AGI/$975
2016 +	2.5% AGI/$695	2.5% AGI/$1390	2.5% AGI/$2085

 

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337

 

Employer: 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.  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 ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

(Combined score of individual and employer mandate tax penalty: $65 billion)

$60.1 Billion: Tax on Health Insurers (Takes effect Jan. 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year.  Phases in gradually until 2018.  Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993
$32 Billion: Excise Tax on Comprehensive Health Insurance Plans (Takes effect Jan. 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family).  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions.  CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956
$23.6 Billion: “Black liquor” tax hike (Took effect in 2010) This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105
$22.2 Billion: Tax on Innovator Drug Companies (Took effect in 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980
$20 Billion: Tax on Medical Device Manufacturers (Takes effect Jan. 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986
$15.2 Billion: High Medical Bills Tax (Takes effect Jan 1. 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995
$13.2 Billion: Flexible Spending Account Cap – aka “Special Needs Kids Tax” (Takes effect Jan. 2013): Imposes cap on FSAs of $2500 (now unlimited).  Indexed to inflation after 2013. 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 thousands of 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. Bill: PPACA; Page: 2,388-2,389
$5 Billion: Medicine Cabinet Tax (Took effect Jan. 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959
$4.5 Billion: Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Takes effect Jan. 2013) Bill: PPACA; Page: 1,994
$4.5 Billion: Codification of the “economic substance doctrine” (Took effect in 2010): This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113
$2.7 Billion: Tax on Indoor Tanning Services (Took effect July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399
$1.4 Billion: HSA Withdrawal Tax Hike (Took effect Jan. 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959
$0.6 Billion: $500,000 Annual Executive Compensation Limit for Health Insurance Executives (Takes effect Jan. 2013): Bill: PPACA; Page: 1,995-2,000                                                                                                                
$0.4 Billion: Blue Cross/Blue Shield Tax Hike (Took effect in 2010): 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 are spent on clinical services. Bill: PPACA; Page: 2,004
$ Negligible: Excise Tax on Charitable Hospitals (Took effect in 2010): $50,000 per hospital if they fail to meet new "community health assessment needs," "financial assistance," and "billing and collection" rules set by HHS. Bill: PPACA; Page: 1,961-1,971
$ Negligible: Employer Reporting of Insurance on W-2 (Took effect in Jan. 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957

Beware your next raise

We spoke about the tax trap in 2010 2011 and 2012 thru our newsletter.  Now that Obamacare is months away CNBC is finally looked at one of the problems.  They looked only at the difference between the minimum help for people buying Obamacare though.  The subsidies are truly breathtaking for lower wage folks until at 100% the poverty level the taxpayer funds 100% of any Obamacare plan (up to $30K per family) plus all copays and other costs.  For an individual to jump from a low paying service company job to a entry level regular career job, as those on welfare are supposed to do, the career job will have to pay far more than it currently should.  For instance going from a McDonalds clerk to an apprentice plumber would mean the plumber would have to pay almost $25 per hour on a 40 hour week just to be equal; Same for engineering, secretarial, nurses, etc.  It pays to be poor under Obamacare.  And when you factor in all the other benefits It really pays to be poor.   On the other hand think of the person who loses the benefits of Obamacare because they make $1 more...Just think, their taxes pay for those making $1 less.  If is not only falling off the cliff it is being pushed off with a lead weight attached to you.  Everything about this was known when it passed the house and senate in 2010 but neither party even discussed it.  Something to think about if you go to a town hall to meet your candidate.  By the way the costs and losses in California beat the ones in the east.

Anyhow here it the CNBC article.  They knew in 10 too.  Why now? well it's too late to do anything about it is my guess.

Be careful you don't fall off the Obamacare "cliff" when the boss asks you to put in some overtime.

Working more could ultimately mean thousands of dollars less for you under a quirk in the new health-care law going into effect this fall. This could prompt some people to cut back on their hours to avoid losing money.

"Working more can actually leave you worse off," the price-comparison site ValuePenguin.com notes in a new analysis.

"It's sort of an absurd scenario," said Jonathan Wu, ValuePenguin.com's co-founder. "It's something for people to be aware of."

In that scenario, an individual or family whose annual income surpasses maximums set by the federal government—if only by $1—will totally lose subsidies available to buy health insurance under the Affordable Care Act.

The loss of those subsidies in some cases will mean that people potentially would have been better off financially if they had worked less during the year, Wu said. And they then would have to work significantly more to make up for the lost subsidy.

"I think they'd be surprised to see how drastic it is," said Wu. "I'd be kind of shocked to see if I make $100 less (in total income each year), I get all these benefits, but if I make $100 more, I get nothing."

"You basically don't want to fall in that hole," said Wu, adding that he believed contractors and others with more control over their incomes would be apt to adjust their hours worked to avoid the subsidy cliff.

He also said that because of lower insurance premiums often offered younger people, the effect will more likely be seen by older people. But "you will see it across all age groups" in the seven states including New York and Vermont where insurance premiums are either barred from being affected by age, or restricted from being dramatically affected, he said.

Under the ACA, federal subsidies in the form of tax credits to buy insurance on new state health insurance exchanges will be available to millions of people who can start enrolling on those exchanges Oct. 1. The subsidies are available to people or families whose incomes total 400 percent above the federal poverty level or less, and are designed to cap their insurance premiums at 9.5 percent of their total income.

Doing the math

For a single person, that FPL income maximum is $45,960 per year. The maximums are adjusted upward for couples and families until maxing out at $94,200 for a family of four.

Under a scenario that ValuePenguin.com identified, a couple in Ohio, both age 50, would be eligible for subsidies worth $3,452 to purchase a so-called silver insurance plan—a moderately priced level of benefits under the ACA's scheme—that costs $9,346 annually if they made up to $62,040 per year.

But if they made just $1 more than that, they would lose the subsidy. Wu noted that the couple then would have to earn at least $65,492 to make up for the lost subsidy.

Maximum income levels for Obamacare insurance subsidies, and premium maximums

Household Size	400% FPL	Premium Cap
1 (Single)	$45,960	$4,366
2 (Couple)	$62,040	$5,893
3	$78,120	$7,421
4	$94,200	$8,949

Source: ValuePenguin.com

In New York, a family of three whose annual income totals $78,120, would pay $12,784 for the second-lower-priced silver plan on that state's insurance exchange. After getting a $5,363 tax credit, the family's net cost for the insurance would be $7,421.

But if the family earned even slightly more than $78,120, they would have to pay the entire $12,784 for the insurance because they then wouldn't qualify for the subsidy.

To make up for that, the family's annual income would have to reach $83,483, Wu said.

The age effect

The stark effect of peoples' age in determining their risk from the subsidy cliff is seen in two examples from Connecticut.

There, Wu said, a 27-year-old single man would pay $3,636 annually for the second-cheapest silver plan—less than the $4,366 cap on insurance premiums for individuals earning $45,960 or less annually. That person would not be eligible for subsidies, and thus would see no disincentive in working more hours.  

But the annual premiums for a 50-year-old Connecticut couple buying that plan would be $12,468. If their combined incomes were $62,040 or less, they would receive $6,575 in subsidies to offset the cost.

However, if their income was more than that, they would lose the subsidies, leaving them out of pocket $6,575. They then would have to earn at least $68,615 to make up for that lost subsidy, Wu said.