The Affordable Care Act will Hit Your Wallet as Early as 2013
Jul 9, 2012 at 11:49 AM
The Americans for Tax Reform recently released a complete list of the taxes within the Affordable Care Act. President Obama's signature legislation contains 20 new or higher taxes. Of these, five major taxes are set to begin as early as 2013.
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.
Flexible Spending Account Cap
This places a $2500 annual cap on Flexible Spending Accounts, which allow 24 million Americans to use their own tax-free money to buy health-related goods and services. This low cap disproportionately affects families with special-needs children:
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.
Medical Device Manufacturing Tax
Within the Affordable Care Act is a 2.3% excise tax on the medical device industry, which includes everything from pacemakers to scalpels. Not every company turns a profit, but this tax goes after revenue. What makes this tax particularly confusing is its classification as an excise tax. Excise taxes exist on cigarettes and other "vices" in an effort to raise their cost and thus decrease individuals' likelihood of purchasing them. Not something you'd want to encourage when it comes to life-saving products. Rep. Erik Paulsen of Minnesota introduced a bill to repeal this tax. It passed the House with bipartisan support and now awaits action in the Senate.
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.
Medicare Payroll Tax Increase
Over the next ten years, this will cost employers $86 billion. It will be interesting to see how this affects long-term unemployment.
"Affordable Care," indeed.