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Five Major ObamaCare Taxes that will Hit Your Wallet in 2013

A Picture of Abby Coleman Abby Coleman
07/06/2012

While the individual mandate tax gets most of the attention, the ObamaCare law actually contains 20 new or higher taxes on the American people. These taxes are gradually phased in over the years 2010 (with its 10 percent “tanning tax”) to 2018 (when the tax on comprehensive health insurance plans kicks in.)

Six months from now, in January 2013, five major ObamaCare taxes will come into force:

1. The ObamaCare Medical Device Manufacturing Tax
 
This 2.3 percent tax on medical device makers will raise the price of (for example) every pacemaker, prosthetic limb, stent, and operating table. Can you remind us, Mr. President, how taxing medical devices will reduce the cost of health care? The tax is particularly destructive because it is levied on gross sales and even targets companies who haven’t turned a profit yet.

These are often small, scrappy companies with less than 20 employees who pioneer the next generation of life-prolonging devices. In addition to raising the cost of health care, this $20 billion tax over the next ten years will not help the country’s jobs outlook, as the industry employs nearly 400,000 Americans. Several companies have already responded to the looming tax by cutting research and development budgets and laying off workers.

2. The ObamaCare High Medical Bills Tax

This onerous tax provision will hit Americans facing the highest out-of-pocket medical bills. 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 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. Over the next ten years, affected Americans will pony up a minimum total of $15 billion in taxes thanks to this provision.

3. The ObamaCare 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.

The cap will also affect families with special-needs children, whose tuition can be covered using FSA funds. Special-needs tuition can cost up to $14,000 per child per year. This cruel tax provision will limit the options available to such families, all so that the federal government can squeeze an additional $13 billion out of taxpayer pockets over the next ten years.

The targeting of FSAs by President Obama and congressional Democrats is no accident. The progressive left has never been fond of the consumer-driven accounts, which serve as a small roadblock in their long-term drive for a one-size-fits-all government health care bureaucracy.

For further proof, note the ObamaCare “medicine cabinet tax” which since 2011 has barred the 13.5 million Americans with Health Savings Accounts from purchasing over-the-counter medicines with pre-tax funds.

4. The ObamaCare Surtax on Investment Income

Under current law, the capital gains tax rate for all Americans rises from 15 to 20 percent in 2013, while the top dividend rate rises from 15 to 39.6 percent. 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.

And, last but not least…

5. The ObamaCare Medicare Payroll Tax increase

This tax soaks employers to the tune of $86 billion over the next ten years.

As you can understand, there is a reason why the authors of ObamaCare wrote the law in such a way that the most brutal tax increases take effect conveniently after the 2012 election. It’s the same reason President Obama, congressional Democrats, and the mainstream media conveniently neglect to mention these taxes and prefer that you simply “move on” after the Supreme Court ruling.

John Kartch is director of communications at Americans for Tax Reform

5 Comments

  1. Windy October 30, 2012

    “5. The ObamaCare Medicare Payroll Tax increase”

    This will only affect those who are in higher income brackets. It will not cut into most of those who are struggling financially so it really doesn’t apply to the average American and won’t affect employers at all. The income levels seem quite reasonable to attach the tax increase to really.

    “When are individuals liable for Additional Medicare Tax?
    An individual is liable for Additional Medicare Tax if the individual’s wages, other compensation, or self-employment income (together with that of his or her spouse if filing a joint return) exceed the threshold amount for the individual’s filing status:

    Married Filing Jointly Filing Status: Threshold Amount = $250,000
    Married Filing Separately Filing Status: Threshold Amount = $125,000
    Single Filing Status: Threshold Amount = $200,000
    Head of Household (with Qualifying Person) Filing Status: Threshold Amount = $200,000
    Qualifying Widow(er) with Dependent Child Filing Status: Threshold Amount = $200,000″

  2. Windy October 30, 2012

    I think that when taking money from “taxpayers pockets” there should always be a specification as to the income levels of these taxpayers. It is misleading to just mention that money will be coming out of taxpayers pockets. It does matter how much those taxpayers are making when the average American is evaluating the pros and cons of the ACA. The average American makes far less than the income levels at which this increased tax would apply. However, unless I stand to receive more Medicare coverage than the next guy I do not feel I should pay a higher Medicare Tax, for example. That’s the real problem I have with the increased Medicare Tax on any income level.
    The Affordable Care Act is not a perfect solution and could never be one. Our healthcare system is far too complex and there is far too much variation within the system.
    We can work with this plan, I think, and adjust it over time, I hope.

  3. Dude November 9, 2012

    The capital gains tax rate increase is the killer, at lease the 2.5% tax on not carrying heath ins. is cheaper them carrying it.

  4. Windy November 10, 2012

    What does the capital gains tax rate have to do with it?

  5. ANNON November 28, 2012

    AS SOME ONE WHO KNOWS FIRST HAND, IN 2012 THE MEDICARE PART B PREMIUM IS $99 FOR PPL RECEIVING UP TO $7,083.33 A MONTH. DO THE MATH! 100% FEDERAL POVERTY LEVEL FOR AN INDIVIDUAL IS $931 PER MONTH! A PERSON REVIEVING $931 IS PAYING 10.6% OF THEIR INCOME. SOMEONE GETTING $7,083.33 IS ONLY PAYING 1.39%! WHY ARE THE POOR PAYING A HIGHER PERCENTAGE THAN SOMEONE GETTING $7,000+ A MONTH? THIS IS ABSOLUTELY ATROCIOUS! I WANT EVERY ELECTED OFFICAL IN D.C. TO LIVE FOR 6 MONTHS ON $931 A MONTH AND HAVE ALL THEIR ASSESTS FROZEN AND SEE IF THEY CAN AFFORD A JOHN EDWARDS &750 HAIR CUT.