First came the compliance burdens. Then came the expensive website woes, millions of policy cancellations and skyrocketing premiums. But if you thought Obamacare couldn’t be less popular, guess again. Here come the taxes.
As reported by Jennifer Robison, there are a slew of new taxes to help pay for the boondoggle that is the Affordable Care Act, and the Internal Revenue Service will be reaching deep into wallets to collect that money starting next year. Those with high incomes face the biggest increases, but people at all income levels ultimately will feel the costs of the health care law — beyond higher deductibles and out-of-pocket expenses.
Single filers earning more than $200,000 and joint filers who earn more than $250,000 will see a 0.9 percent Medicare surtax on top of the existing 1.45 percent Medicare payroll tax, as well as a 3.8 percent Medicare tax on unearned income (investment dividends, rental income, interest and capital gains on property). And as Ms. Robison reported, that’s on top of the 2013 increases in the capital gains tax and the highest income tax bracket, meaning high earners are seeing a substantial tax jump in just two years’ time.
For the majority of taxpayers, whose income doesn’t meet that $200,000/$250,000 threshold, there are new limits on medical expense deductions and on flexible spending accounts that are used to pay for everything from prescriptions to braces or even tuition for special-needs children.
Then, of course, there’s the dreaded individual mandate, which hits taxpayers who don’t obtain expensive Obamacare-compliant health coverage. For 2014, the penalty is $95 per person ($285 family maximum) or 1 percent of taxable income, whichever is greater. If your taxable income is $60,000, that’s a $600 tax. For the tax year 2016, those penalties rise to $695 per person ($2,085 family maximum) or 2.5 percent of taxable income, or a $1,500 tax on that $60,000 income.
How many families can afford that kind of tax hit?
Yes, there are some credits, particularly for small businesses. But as Bill McCarthy, a partner in the local accounting firm McCarthy Kaster CPAs, told Ms. Robison, figuring out the existing credit often chews up much of the savings because of record-keeping requirements and paperwork. “You might save $2,000, but the cost to calculate that is $1,000,” Mr. McCarthy said. That credit grows in 2014, but it’s unclear how many small companies might bother taking it — the Obama administration’s projections on everything from enrollment to pricing have been far off the mark.
Don’t forget the delayed employer mandate, which takes effect Jan. 1, 2015. Businesses that have at least 50 full-time equivalent employees and don’t offer Obamacare-compliant coverage will be taxed between $2,000 and $3,000 per worker.
One employer tax was not delayed to 2015: an annual reissuance fee of $63 per per insured person, a levy intended to bail out insurance companies for covering pre-existing conditions. So businesses are taxed if they offer medical benefits and taxed if they don’t. The reissuance tax is so bad the Obama administration wants to exempt unions as a political favor.
With each passing day, more Americans are realizing the Affordable Care Act isn’t affordable at all. It makes people and businesses pay more for worse coverage with less choice and it hits them with higher tax bills, all to subsidize insurance for a select few. As Washington Examiner columnist Byron York wrote this week, the Obama administration’s new promotional push to prop up this failing law doesn’t mention what was supposed to be the primary goal: helping Americans buy affordable health insurance.
Remember President Barack Obama’s promise that the law would reduce average annual family health insurance premiums by $2,500?
Despite the law’s myriad other failings — it has actually increased the number of uninsured — its resulting lack of affordability is enough to justify full repeal. This is not a healthy economy. There are not enough jobs. Obamacare and its tax and regulatory burdens are hurting, not helping.
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This article was written by the editorial board of the Las Vegas Review-Journal.