April, 2015, Part 2, The Unfolding Disaster That Is Obama Care: Taxes To The Left Of Them, Taxes To The Right of Them

Every month for the past few years we have had to dedicate any number of posts each month to the unfolding disaster that is Obama Care. This piece of legislation has to be the worst piece ever passed, given its detrimental effects on millions of Americans and their families. From losing access to their preferred insurance policies, doctor and hospitals to higher insurance costs to great risk of identity theft, the disasters from this law have been never ending and always a fiasco.

And the totally sad thing about the whole effort is that the legislation will never be successful in reducing health care costs in this country since it never addressed the root causes of the high health care costs in this country. For a list of those root causes, check out yesterday’s post at:

http://loathemygovernment.blogspot.com/2015/04/aporil-2015-part-1-unfolding-disaster.html

Today and tomorrow we will review the latest disasters that have cropped up for attention in the past month or so.

1) Robert Woods recently writing for Forbes discussed the many taxes that Obama Care unleashed on Americans and on our economy. Although Obama is always harping on how his policies only increase the tax burden on the wealthy, usually claiming that those Americans that earn less than $250,000 a year are not hit by his tax policies, Mr. Woods starts off his article by showing how three of the larger taxes do nothing of the sort:

- Obama Care imposes a 2.3% tax on medical device makers. The problem is that the tax is on top line revenue, not profits which makes it especially egregious. Thus, there is little doubt from most economists that medical device manufacturers, especially start up ones that may be in the growth mode with little profit cushion in their business, to raise the price on medical devices. 

But here is the reality: many people earning less than $250,000 a year are likely customers of medical device companies. They are the ones that will be paying more for their needs, contrary to what Obama might claim. This is a tax pass through as a result of Obama Care which makes it a tax on ALL Americans nonetheless. 

Adding insult to injury, a lot of these companies also make medical devices for family pets. So even if you do not need a device and will not be affected, your dog or cat might be if they are in need, which means you pay more. 

- Consider another Obama Care tax that could affect many Americans earning less than $250,000 in a typical year. The net investment income tax adds a 3.8% tax on top of your interest, dividends and capital gains. While tax supposedly only targets upper income earners, it would be interesting to hear Obama explain this tax is hard to explain this to a modest income family who sells their lifelong property and gets hit with an extra 3.8% tax on top of their capital gain tax. 

In many cases like these, middle class Americans are selling their long term house and downsizing into retirement, hoping and planning to use their home equity to support their retirement needs. And now Obama Care hits them with a hefty 3.8% tax, on top of their capital gains tax, dealing a serious hit to their retirement plans even though they may never earned close to $250,000 a year.

- Many Americans have very robust health insurance plans and policies from either their employer or their union. And I would bet that the vast majority of them do not earn over $250,000 a year. But in 2018, Obama Care comes after those so-called “Cadillac” policies with a whopping 40% tax benefits that exceed certain, and very reachable, thresholds.

So much for another Obama promise that those earning less than $250,000 will largely be unaffected by Obama Care taxes. Mr. Woods lists out all of the taxes that he can identify below, see how many affect your family even if you do not earn over $250,000 a year:

• 2.3% Tax on medical device manufacturers (this doesn’t hit you directly, but indirectly it sure can).
• 3.8% Net investment income tax. This one is a big one. Depending on your income, it adds a 3.8% tax on top of your interest, dividends and capital gains.
• Employer mandate on business with over 50 full-time equivalent employees to provide health insurance to full-time employees. $2,000 per employee $3,000 if employee uses tax credits to buy insurance on the exchange.
• 40% Excise tax on high-end (Cadillac) health insurance plans (40% excise tax on the portion of employer-sponsored health coverage that exceeds $10,200 a year and $27,500 for families).
• Medical deduction threshold tax increase (threshold to deduct medical expenses as an itemized deduction increases to 10% from 7.5%).
• Individual mandate (a tax for not purchasing insurance, though the tax penalty is called a Shared Responsibility Payment, the greater of 1% of your income above the filing threshold of $10,150 for singles and $20,300 for married couples filing jointly or $95 per adult ($47.50 per child), with a maximum of $285 for a family, whichever is higher. It goes up in 2015.
• Excise tax on charitable hospitals which fail to comply with the requirements of Obamacare.
• Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D.
• Medicare Part A tax increase of .9% over $200k/$250k.
• An annual $63 fee levied by Obamacare on all plans (decreased each year until 2017 when pre-existing conditions are eliminated) to help pay for insurance companies covering the costs of high-risk pools.
• Medicine cabinet tax (over the counter medicines no longer qualify as medical expenses for flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), health savings accounts (HSAs), and Archer medical saving accounts (MSAs).
• Additional tax on HSA/MSA distributions.
• HSAs or Archer MSAs, penalties for non-qualified medical expenses of 10% to 20% in the case of an HSA and from 15% to 20% for an MSA.

So much for only rich people getting tax screwed by Obama Care, everyone feels the pinch for a law that will never accomplish its original objective.

2) Not only are Obama Care taxes numerous and bad, they get worse over time. Consider the following graph of how the tax burden increases over time, robbing businesses and individuals the freedom to keep their wealth and do with as they please:

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Thus, within seven short years, Obama Care’s 18 taxes (Heritage’s count) will be taking $120 billion out of the economy, stunting economic growth and employment growth. The sad part is that many of these taxes will take place after Obama and many of the short sighted politicians who actually voted for these taxes are out of office and will not feel the wrath and economic harm of their decision to back such a horrendous law.Consider Heritage’s take on what all of these taxes will do to the country: “At a time when the already-onerous tax code has created a significant drag on the economy, Obamacare’s tax hikes only do more damage. Many Americans have found themselves afflicted by higher health insurance premiums, driven up, in part, by new taxes on insurers. Increased rates on capital gains and dividends from the wage and investment tax hike discourage saving and investment, resulting in fewer jobs created and lower wage growth.Because of Obamacare, Americans are paying much higher taxes and those taxes are hurting the economy. Though some bipartisan efforts exist to repeal some of the new taxes that benefit special-interest groups, including the medical device tax, an incomplete approach won’t be sufficient to overcome the detrimental effects of this law.”Two quick updates but onerous in their message: taxes for everyone, lower cost insurance and healthcare costs for very few. More unfolding disasters from Obama Care tomorrow.

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