e-News March 20, 20103/20/10
Action Alert: Health Care Taxes!
“As I write this, the powerful House Rules Committee is meeting to establish the format for debate in the House, possibly as early as tomorrow, on the President’s health care proposal. So time is running short for people to make their views known to their Members of Congress in the House and Senate.
“The latest word is that Speaker Pelosi still has not persuaded enough Democrats to vote for the bill.
“Of course, there are plenty of good reasons to oppose this legislation, including $569 billion in cuts to Medicare and the $523 billion in job-killing tax increases.”
Here is a partial list of the tax increases in the Pelosi health care bill:
- If you don’t buy health insurance (as dictated acceptable by a new federal czar), you will be fined up to 2.5% of your income even if you pay all of your medical expenses yourself. If your company does not provide “acceptable” health insurance to all workers, the company will be fined up to $2,000 per employee. (This proposal alone may require the hiring of 1,600 new IRS employees. See attached data sheet from the House Committee on Ways and Means);
- An additional Medicare tax on self-employment income and wages. This removes the current cap on wages subject to this tax and it will effectively move the top income tax rate from 35% to 43.4% within a couple of years;
- For certain taxpayers, the bill increases the Medicare FICA tax from 2.9 percent to 3.8 percent and for the first time, this tax will be extended beyond wages to include interest, dividends, capital gains, annuities, royalties, home sales and rents. This new tax will be particularly damaging to New Jersey’s seniors, many of whom depend on their interest, dividends and annuities to cover their monthly expenses and potential nursing home costs;
- There is a 2.9% tax on all medical “devices”, which basically means everything used in a doctor’s office or hospital. Including gowns, syringes, wheelchairs and the like. This will increase health care costs for everyone who does not get free government insurance;
- The deduction for medical expenses is currently limited to those expenses that exceed 7.5% or your income. This will be raised to a threshold of 10% of your income. This means that fewer people will get any tax relief from medical expenses they pay for themselves;
- There are various taxes on anything a person might do to pay for their own medical expenses. Things like Health Savings Accounts, Cafeteria Plans, and Flexible Savings Accounts are ways for people to save their OWN money for their OWN medical care on a pre-tax basis. Under the bill, they will be limited and taxed;
- A 10% tax on tanning services;
- A tax on self-insured health plans. This is another penalty on those who try to pay for their own health care;
- A new tax on pharmaceutical manufacturers, an important employer in New Jersey. This will raise the price of medicines for everyone who does not get them from the government for free;
- A new tax on “Cadillac” health plans. This is a tax of up to 55% on any health insurance that costs over about $800 per month including employee and employer contributions. This tax does not apply if you are a union member or your plan is from AARP or Blue Cross Blue Shield of Michigan;
- There is a new tax on all “for-profit” health insurance companies (except for a few favored ones). This will also raise the costs of premiums for everyone not getting free care from the government.
Combined, these new taxes will cause medical costs to go up and private sector job creation to go down, increase budget deficits and national debt, and force physicians to stop seeing Medicare and Medicaid patients. It will cause fewer people to pay for their own care, and more to seek government care.
In the end, the Pelosi health care proposal adds up to more taxes, more spending, and more deficits. This is a bill American cannot afford.
Highlights of New IRS Authority
Under H.R. 3590 – the Senate-passed health bill
(Source: House Ways and Means Committee Minority)
- IRS agents verify if you have "acceptable" health care coverage;
- IRS has the authority to fine you up to $2,250 or 2 percent of your income (whichever is greater) for failure to prove that you have purchased “minimum essential coverage”;
IRS can confiscate your tax refund;
IRS audits are likely to increase;
- IRS will need up to $10 billion to administer the new health care program this decade;
- IRS may need to hire as many as 16,500 additional auditors, agents and other employees to investigate and collect billions in new taxes from Americans;
Nearly half of all these new individual mandate taxes will be paid by Americans earning less than 300 percent of poverty ($66,150 for a family of four).
SPECIAL EXEMPTION: The Senate-passed bill prohibits the IRS from imposing these taxes and penalties on illegal immigrants.
For a listing of the “Gross Tax Increases in Democrat Health Bills” click here.