Fiscal cliff or not - $1 Trillion 'Obamacare' Tax Hike Hitting on Jan. 1
Parents of special needs children expected to be hit especially hard
Regardless of the outcome of fiscal cliff negotiations this coming New Year, Americans will be hit with a $1 trillion "Obamacare" tax hike. The said health care reform contains twenty new or higher taxes, and five of the taxes will hit for the first time on January 1. According to the Congressional Budget Office In total, Americans face a net $1 trillion tax hike for the years 2013-2022.
The Obamacare Flex Account Tax will be particularly disadvantageous for parents of special needs children.
1. The Obamacare Medical Device Tax: Obamacare will impose a new 2.3 percent excise tax on gross sales for all medical device manufacturers, regardless if the company does not earn a profit in a given year. Medical device manufacturers employ 409,000 people in 12,000 plants in the U.S. In addition to discarding small business jobs as well as impacting research and development budgets, this increases the cost of overall U.S. health care. This plan will make everything from pacemakers to artificial hips more expensive.
2. The Obamacare Flex Account Tax: The 30-35 million Americans who use a pre-tax Flexible Spending Account at work to pay for their family's basic medical needs now face a new government cap of $2500, squeezing $13 billion of tax money from Americans over the next ten years.
This new cap will be particularly disadvantageous for parents of special needs children. There are several million families with special needs children in the U.S. and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children can easily exceed $14,000 per year. Under the new rules, FSA dollars can be used to pay for this type of special needs education, limiting the options available to these families.
3. The Obamacare Surtax on Investment Income: A new 3.8 percentage point surtax on investment income earned in households making at least $250,000, or $200,000 single. This would result in the following top tax rates on investment income:
Capital Gains - 15 percent
Dividends - 15 percent
Other - 35 percent
In 2013 and afterwards, following the current law:
Capital Gains - 23.8 percent
Dividends - 43.4 percent
Other - 43.4 percent
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.
4. 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 most infirm Americans. This comes as most disadvantageous for near retirees and those with modest incomes, but outstanding medical bills.
5. 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.
Happy New Year!
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Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Obamacare, new taxes, special needs children, retirees, medical devices
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