What ever results from the fiscal cliff negotiations, whether everyone gets a tax increase or just the progressive’s hated rich, there is a one trillion dollar tax increase scheduled to hit on January 1,
The five major Obamacare taxes taking effect on January are as follows:
The Senior Citizen Tax-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. This tax attacks America’s seniors.
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 ten years. (Currently, the accounts are unlimited under federal law, though employers are allowed to set a cap.)take our poll - story continues below
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.
This provision hits my family particularly hard (even though my household income is way less than the $250K), I have special needs kids and I have been battling a few illnesses myself.
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:
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.
If Obama gets his way on income taxes on top of the above tax on investing, many people making above $250K may join French actor Gerard Dépardieu in Belgium.
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.
Between the above and the flex account change, we will be screwed in 2013, no matter what happens to my income tax. But there are also other taxes on the wealthy.
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:
These fiscal cliff negotiations are only part of the story. Obama’s class warfare involving income tax rates are happening on top of $1 Trillion in already scheduled Obamacare taxes….but no one is talking about that.
Source: Americans For Tax Reform