The Obamacare tax increases

There are some twenty new taxes or tax increases that click in with Obamacare.  Here are the most notable:

The Obamacare Medical Device Tax – a $20 billion tax increase: 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 prosthetics more expensive.

The Obamacare “Special Needs Kids Tax” – a $13 billion tax increase: The 30-35 million Americans who use a Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2,500 (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 – a $123 billion tax increase: This is a new, 3.8 percentage point surtax on investment income earned in households making at least $250,000 ($200,000 single). . . .

The Obamacare “Haircut” for Medical Itemized Deductions – a $15.2 billion tax increase: 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 — an $86.8 billion tax increase: 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.

via Americans for Tax Reform : Top Five Worst Obamacare Taxes Coming in 2013.

 

Republicans will raise taxes if Obama wins

Republicans have used their majority in the House of Representatives to foil President Obama’s attempts to raise taxes.  But don’t expect them to keep doing that if Obama is re-elected.  Republicans are saying they will interpret his re-election as a “referendum on taxes”–a sign that voters are willing to pay more–which will trigger a change in strategy that would trade tax increases for other Republican causes:

Senior Republicans say they will be forced to retreat on taxes if President Obama wins a second term in November, clearing the biggest obstacle to a deal with Democrats to defuse a year-end budget bomb that threatens to rock the U.S. economy.

Republicans have long resisted tax increases of any kind. But taxes are a major battleground in the campaign between Obama and Republican Mitt Romney, Capitol Hill veterans say, and the victor will be able to claim a mandate for his policies.

“This is a referendum on taxes,” said Rep. Tom Cole (R-Okla.), a senior member of the House Budget Committee. “If the president wins reelection, taxes are going up” for the nation’s wealthiest households, and “there’s not a lot we can do about that.”

With Election Day still more than six weeks away and the president holding a thin lead in national polls, Republicans say they are not conceding that an Obama victory is the likely outcome. But they are beginning to plan for that possibility.

Lawmakers expect to leave town Friday and will not return until mid-November, when they will have little time to head off $500 billion in automatic tax increases and spending cuts set to take effect Jan. 2.

If Romney wins the White House, Republicans say, their strategy is clear: They would push to maintain current tax rates through 2013, giving the new president time to draft a blueprint for overhauling the tax code and taming the $16 trillion national debt.

But if Obama wins, the GOP would have no leverage — political or procedural — to force him to abandon his pledge to raise taxes on family income over $250,000, according to senior Republicans in the House and the Senate.

So they are beginning to contemplate a compromise that would let taxes go up in exchange for Democratic concessions on GOP priorities.

via GOP retreat on taxes likely if Obama wins – The Washington Post.

Romney’s taxes

Democrats have been accusing Romney of not paying any income taxes or of hiding something in his finances.  So the Republican presidential nominee has released his 2011 returns.  It turns out, he paid 14.1% of his income to the government.  And he paid 30% to charity.   He didn’t even claim all of the charitable deductions he could have!

He also submitted a letter from his tax accountants, PriceCooperWaterhouse, saying that between 1990 and 2009, his average taxrate was 20.2% and that he never paid less than 13.66%.

So much for the Democrats’ tactic of trying to demonize the guy over his taxes, though the Washington Post article giving the details takes a strangely negative tone (saying how his taxes “would have been” only 10% if he took all of his deductions, that he could amend his return at any time, that we still don’t know the flow of his investment income, and other irrelevant attempts to put the worst construction on facts that are all to Romney’s credit).

via Mitt Romney releases tax return for 2011, showing he paid 14.1 percent tax rate – The Washington Post.

The 47%

As you have probably heard, Mitt Romney was secretly recorded at a fundraiser saying this:

“There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it — that that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what. … These are people who pay no income tax. … [M]y job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”

via Fact-checking Romney’s “47 percent” comment – Political Hotsheet – CBS News.

It is, in fact, true that around 47% of Americans don’t pay income taxes, though they do pay payroll and sales taxes, among others.  I pose to you two possible reactions:

(1)  This is terrible!  Everyone should pay something, if only a little, to make them full stakeholders in America.  These people who pay nothing are the constituency for raising taxes on everyone else!

(2)  This is good!  The government takes too much of people’s income in taxes as it is.  We should increase the number of people who pay nothing, to the point of eliminating the income tax altogether.

Which is the more conservative reaction?

Of course, it’s another matter to say that this same 47% is also dependent, entitled, irresponsible, and the rest of Romney’s insinuations.  I know quite a few of these folks who aren’t that way.  Many of them are staunch conservatives.

Does this statement show that Romney feels contempt for almost half of the nation that he aspires to lead?  Does this statement–another example of his proclivity for undiplomatic, undisciplined, and careless statements–show him to be undiplomatic, undisciplined, and careless?  Do this make you think he is less than presidential material?

Pro-conservative taxes

Liberals use the tax code as a social-engineering device to shape people’s behavior in order to manipulate society as they see best.  Bruce Walker asks, tongue mostly in cheek, why don’t conservatives do that?

If conservatives simply threatened to tax politically unpopular leftist behavior, that might well be enough to get the left to accept the premise that federal tax law should not be used to punish behavior.

The Supreme Court has determined that abortion is a right, but so is drinking an extra-large soda or smoking a cigar. Abortion, though legal, is not popular, and polls have consistently shown that more Americans think that abortion is immoral than moral. Taxing patients for abortions might not be a popular tax, but what about taxing abortionists? Impose a transaction tax per abortion which is high enough so that few, if any, doctors could make money murdering unborn babies.

If abortion is unpopular, pornography is extraordinarily unpopular with Americans. The Supreme Court has made it very difficult — indeed, almost impossible — to ban pornography, but nothing would prevent a 200% federal sales tax on all films, magazines, or other published materials which involve nudity and appeals to prurient interests. Draining the profit from pornography would make it much less common in society.

Taxes per transactions could also be imposed upon body-piercing, out-of-wedlock births, acts of prostitution, and countless other socially corrosive activities which may be legal (or at least not a federal offense, as in the case of prostitution) but which the rest of society pays for and which ought to be just as subject to taxes intended to discourage bad behavior as taxes on gasoline, cigarettes, and alcohol.

via Articles: Conservative Tax Hikes.

 

Amazon’s same DAY delivery

We blogged earlier about how online shopping sites have a big advantage over local businesses in not having to charge sales tax.  So states and now Congress have been trying to pass laws to collect those taxes.  Amazon used to fight those efforts, but no longer, saying, in effect, throw me into that briar patch. From Farhad Manjoo in Slate:

Why would Amazon give up its precious tax advantage? This week, as part of an excellent investigative series on the firm, the Financial Times’ Barney Jopson reports that Amazon’s tax capitulation is part of a major shift in the company’s operations. Amazon’s grand strategy has been to set up distribution centers in faraway, low-cost states and then ship stuff to people in more populous, high-cost states. When I order stuff from Amazon, for instance, it gets shipped to California from one of the company’s massive warehouses in Kentucky or Nevada.

But now Amazon has a new game. Now that it has agreed to collect sales taxes, the company can legally set up warehouses right inside some of the largest metropolitan areas in the nation. Why would it want to do that? Because Amazon’s new goal is to get stuff to you immediately—as soon as a few hours after you hit Buy. . . .

It’s hard to overstate how thoroughly this move will shake up the retail industry. Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.

via Amazon same-day delivery: How the e-commerce giant will destroy local retail. – Slate Magazine.


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