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$1 Trillion Obamacare Tax Hike Hitting on Jan. 1

On January 1, regardless of the outcome of fiscal cliff negotiations, Americans will be hit with a $1 trillion Obamacare tax hike.

Obamacare contains twenty new or higher taxes. Five of the taxes hit for the first time on January 1. In total, Americans face a net $1 trillion tax hike for the years 2013-2022, according to the Congressional Budget Office.

The five major Obamacare taxes taking effect on January 1 are as follows:

The Obamacare Medical Device Tax: Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales – even if the company does not earn a profit in a given year. In addition to killing small business jobs and impacting research and development budgets, this will increase the cost of your health care – making everything from pacemakers to artificial hips more expensive.

The Obamacare Flex Account Tax: The 30-35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Currently, the accounts are unlimited under federal law, though employers are allowed to set a cap.)

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 several million 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. This Obamacare tax provision will limit the options available to these families.

The Obamacare Surtax on Investment Income: This is a new, 3.8 percentage point 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







2013+ (current law)




The table above also incorporates the scheduled hike in the capital gains rate from 15 to 20 percent, and the scheduled hike in dividends rate from 15 to 39.6 percent.

The Obamacare “Haircut” for Medical Itemized Deductions: Currently, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). This tax increase imposes a threshold of 10 percent of AGI. By limiting this deduction, Obamacare widens the net of taxable income for the sickest Americans. This tax provision will most harm near retirees and those with modest incomes but high medical bills.

The Obamacare Medicare Payroll Tax Hike: The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate instead. This is a direct marginal income tax hike on small business owners, who are liable for self-employment tax in most cases. The table below compares current law vs. the Obamacare Medicare Payroll Tax Hike:


First $200,000
($250,000 Married)

All Remaining Wages

Current Law

2.9% self-employed

2.9% self-employed

Obamacare Tax Hike

2.9% self-employed

3.8% self-employed

Read more:
Follow us: @taxreformer on Twitter 


Asked by Natesmom507 at 1:08 PM on Dec. 29, 2012 in Politics & Current Events

Level 35 (74,836 Credits)
This question is closed.
Answers (13)
  • LMAO she posts FIVE sources....FIIIIIVE and you pull out ONE and ignore the rest. You and the four lemmings that liked you are why this country in this state. HuffPost, CNBC, and FORBES are about as left as you can get before you hit Mother Jones. But hey...when you can't fight FACTS whatcha gonna do.....

    Answer by momof030404 at 2:49 PM on Dec. 29, 2012

  • Did you just cite a Craigslist rant as a "reliable and non-biased source"?

    Answer by KristiS11384 at 1:38 PM on Dec. 29, 2012

  • Well if Atr wasn't a completely biased site known to distort facts I might have a concern. So unless you can provide an unbiased site I'll take this "information" with a grain of salt.

    Answer by KristiS11384 at 1:14 PM on Dec. 29, 2012

  • The AFFORDABLE Care Act...............suuuuurrrrreeeee. Gong to be amusing watching people realize it actually isn't free...and there is actually very little actual health CARE involved. It will be a big payday for the insurance companies though.


    Answer by yourspecialkid at 8:14 PM on Dec. 29, 2012

  • Whining and bitching, anon? I'm glad you can afford to pay more in taxes. Many of us here are less fortunate, and struggling to make ends meet. My family cannot afford another $3000 a year in taxes. We could have just expanded Medicaid eligibility and allowed insurance companies to compete across state lines and saved the trillions this will cost.

    I wish we could just let those who voted for Obama shoulder all of these new taxes.

    Answer by Iamgr8teful at 10:54 PM on Dec. 29, 2012

  • maybe instead of being mad at ppl who voted for Obama (since the majority of them would have voted Democrat regardless) you should be mad at your own side for picking such a turd as the nominee. just a thought...

    Answer by okmanders at 12:36 AM on Dec. 30, 2012

  • is this suppose to be a surprise? i thought everyone already knew taxes were gonna have to go up to pay for this...

    Answer by okmanders at 3:37 PM on Dec. 29, 2012

  • "We, the people are the rightful masters of both Congress and the courts not to overthrow the Constitution, but to overthrow men who pervert the Constitution..."Abraham Lincoln.

    Answer by Michigan-Mom74 at 12:03 AM on Dec. 30, 2012

  • *sigh* And yet, folks still voted for him.....


    Answer by Michigan-Mom74 at 11:50 PM on Dec. 29, 2012

  • The entire healthcare system needs to be overhauled not just insurance

    Answer by booklover545 at 12:32 AM on Dec. 30, 2012