There is an popular opinion piece on FoxNews.com by John Kartch of Americans for Tax Reform called “Five Major Obamacare Taxes that will hit your wallet in 2013.” Shockingly, it is very misleading on nearly every issue it discusses.
Medicare Payroll Tax:
“The ObamaCare Medicare Payroll Tax increase
This tax soaks employers to the tune of $86 billion over the next ten years”
You already pay a Medicare Payroll tax of 1.45%-2.9%. Starting in 2013 an extra .09% Medicare tax will be charged on individuals with income over $200,000.
Nowhere in the article does it mention that this extra .9% tax is on incomes over $200,000. The article misleadingly insinuates that everyone will have to pay this.
Surtax on investment income:
“The new ObamaCare surtax takes the top capital gains rate to 23.8 percent and top dividend rate to 43.4 percent. The tax will take a minimum of $123 billion out of taxpayer pockets over the next ten years.”
Currently max federal income tax rate on long term capital gains and dividends is 15%. In 2013 it is scheduled to rise to 20%, and the max rate will increase to 39.6%. In 2013 all or part of net investment income, collected by higher income individuals will have a 3.8% Medicare contribution tax added.
The story, again, leaves out the fact that you must make over $200,000 per year to see this 3.8% increase.
Flexible spending account cap:
“The 24 million Americans who have Flexible Spending Accounts will face a new federally imposed $2,500 annual cap. These pre-tax accounts, which currently have no federal limit, are used to purchase everything from contact lenses to children’s braces. With the cost of braces being as high as $7,200, this tax provision will play an unwelcome role in everyday kitchen-table health care decisions.
Under current law millions of people don’t take advantage of these accounts, because if you don’t use the money in them within a year, you forfeit all of the money in these accounts. It is known as the ‘use it or lose it rule.’ Most people don’t use these accounts because they can’t predict their future health care needs, and don’t want to forfeit the money at the end of each year.
Another thing he doesn’t mention is although before Obamacare there is no legal limit on these accounts, 78% of large employers set limits, typically around $5,000.
Be on the lookout for a change to the ‘use it or lose it rule’ sometime in the future.
Medical Device Manufacturing Tax:
2.3% tax on Medical Device Manufacturing: This is true, and there is a chance the manufacturers will pass this tax onto consumers.
High Medical Bills Tax:
“Currently, Americans are allowed to deduct medical expenses on their 1040 form to the extent the costs exceed 7.5 percent of one’s adjusted gross income. The new provision will raise the threshold to 10%. “The new ObamaCare provision will raise that threshold to 10 percent, subjecting patients to a higher tax bill. This tax will hit pre-retirement seniors the hardest.”
Through 2016 taxpayers 65 and older, it stays at 7.5%, and for taxpayers in the alternative minimum tax (high income earners) they already pay 10% now. Also, to get the deduction in the first place you have to have enough other itemized deductions to beat taking the standard deduction.
You can look up the numerous benefits for seniors, including savings that they have already had, on any reputable, non opinion based websites.