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Current Events & Hot Topics Current Events & Hot Topics

$1 Trillion Obamacare Tax Hike Hitting on Jan. 1

Posted by on Dec. 29, 2012 at 12:48 PM
  • 29 Replies
2 moms liked this
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

Dividends

Other*

2012

15%

15%

35%

2013+ (current law)

23.8%

43.4%

43.4%

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)
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

Follow the author on Twitter: @JohnKartch



Read more: http://atr.org/trillion-obamacare-tax-hike-hitting-jan-a7393#ixzz2GSqOW26E
Follow us: @taxreformer on Twitter

by on Dec. 29, 2012 at 12:48 PM
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Replies (1-10):
angelachristine
by Bronze Member on Dec. 29, 2012 at 12:53 PM
1 mom liked this

the fsa cut made me mad. We used way more than 2500 just for me and dh last year. we can barely afford healthcare as is and this is just making it harder on struggling families. 

I didn't know about the other stuff but I have health problems and we don't make much so i can't imagine they will make things anything but harder.

Carpy
by Ruby Member on Dec. 29, 2012 at 3:58 PM
2 moms liked this
Progressive's don't care. They love taxes.
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yourspecialkid
by Platinum Member on Dec. 29, 2012 at 8:09 PM
1 mom liked this

 And people just love the AFFORDABLE care act!  LOL

But hey....it is a good deal for the insurance companies...might want to look into picking up some of their stocks.

 

stacymomof2
by Ruby Member on Dec. 29, 2012 at 9:43 PM
1 mom liked this

Why does your link the says "Congressional Budget Office"  go to the Americans for Tax reform site?

Aivlys_
by Member on Dec. 29, 2012 at 9:48 PM
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Well lets thank all those Obama supporters, they voted for this insanity! :)
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turtle68
by Mahinaarangi on Dec. 29, 2012 at 9:56 PM

 when is it going to be implemented? 

Claire-Huxtable
by on Dec. 29, 2012 at 9:59 PM
1 mom liked this
Probably because the blog has a link to a letter from the CBO to Boehner.


Quoting stacymomof2:

Why does your link the says "Congressional Budget Office"  go to the Americans for Tax reform site?


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lga1965
by on Dec. 29, 2012 at 10:05 PM
1 mom liked this

 Isn't that Grover Norquists organization? He seems to be in charge of Republicans now....the organization is against raising taxes, against taxing RICH and determined to wreck the economy just like the Bush administation did. Why doesn't someone want to do what the Clinton administation did when we were in such good shape financially?

It seems Republicans want the benefits of what the Government can do for them without paying for it! They don't want to pay their fair share of taxes. They want freebies. It is not rational.

Mommy_of_Riley
by Jes on Dec. 29, 2012 at 10:08 PM
Oh dear...
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Natesmom507
by on Dec. 29, 2012 at 10:14 PM
3 moms liked this


Quoting lga1965:

 Isn't that Grover Norquists organization? He seems to be in charge of Republicans now....the organization is against raising taxes, against taxing RICH and determined to wreck the economy just like the Bush administation did. Why doesn't someone want to do what the Clinton administation did when we were in such good shape financially?

It seems Republicans want the benefits of what the Government can do for them without paying for it! They don't want to pay their fair share of taxes. They want freebies. It is not rational.

Iga you should have been an astronaut. Once again you are way out in space.

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