Here Are The New Taxes You’re Going To Pay For Obamacare
And it also means a lot more people will be paying more taxes.
(You didn't think Obamacare was free, did you?)
Here are some of the new taxes you're going to have to pay to pay for Obamacare:
- A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%--if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%. (WSJ)
- A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you're self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%. (WSJ)
- Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you'll have to cut that to $2,500. (ATR.org)
- The itemized-deduction hurdle for medical expenses is going up to $10,000. Right now, any medical expenses over $7,500 per year are deductible. Next year, that hurdle will be $10,000. (ATR.org)
- The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%. That's twice the penalty that applies to annuities, IRAs, and other tax-free vehicles. (ATR.org)
- A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010. (ATR.org)
- A 40% tax on "Cadillac Health Care Plans" starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. The 2018 start date is said to have been a gift to unions, which often have comprehensive plans. (ATR.org)
- A"Medicine Cabinet Tax" that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011. (ATR.org)
- A "penalty" tax for those who don't buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income. (More details here.)
- A tax on medical devices costing more than $100. Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures. (Breitbart.com)
Note that these taxes are both "progressive" (aimed at rich people) and
"regressive" (aimed at the middle class and poor people). The big ones--the 3.8%
investment income hike and the Medicare tax increase--only hit you if you're
making more than $200,000 a year. The rest hit you no matter how much you're
making.
Many Americans are furious that Obamacare will require them to buy health insurance.
Most of these folks seem to hate the idea that Obama is forcing them to do something more than they hate the idea of shelling out money.
But for those who also care about the money, here are the details.
The good news is that, for most people, the "penalty tax" for those who choose not to buy health insurance will cost a lot less than health insurance.
As with everything tax-related, there's no simple answer to "How much is the Obamacare penalty tax?" But here are some key points, from FactCheck.org:
- The penalty/tax will be phased in from 2014 to 2016.
- The minimum penalty/tax in 2016 will be $695 per person and up to 3-times that per family. After 2016, these amounts will increase at the rate of inflation.
- The minimum penalty/tax per person will start at $95 in 2014 (and then increase through 2016)
- No family will ever pay more than 3X the per-person penalty, regardless of how many people are in the family.
- The $695 per-person penalty is only for those who make between $9,500 and ~$37,000 per year. If you make less than ~$9.500, you're exempt. If you make more than ~$37,000, your penalty is calculated by the following formula...
- The penalty is 2.5% of any household income above the level at which you are required to file a tax return. That level is currently $9,500 per person and $19,000 per couple. The penalty on any income above that is 2.5%. So the penalty can get expensive quickly if you make a lot of money.
- However, the penalty can never be more than the cost of a "Bronze" heath insurance plan purchased through one of the state "exchanges" that will be created as part of Obamacare. The CBO estimates that these policies will cost $4,500-$5,000 per person and $12,000-$12,500 per family in 2016, with the costs rising thereafter.
- Less than $9,500 income = $0
- $9,500 - $37,000 income = $695
- $50,000 income = $1,000
- $75,000 income = $1,600
- $100,000 income = $2,250
- $125,000 income = $2,900
- $150,000 income = $3,500
- $175,000 income = $4,100
- $200,000 income = $4,700
- Over $200,000 = The cost of a "bronze" health-insurance plan
But here's some more good news for those folks:
The IRS will not have the power to charge you criminally or seize your assets if you refuse to pay. The IRS will only have the ability to sue you. And the most the IRS can collect from you if it wins the suit is 2X the amount you owe. So if you want to thumb your nose at the penalty-tax, the IRS won't be able to do as much to you as they could if you refused to pay, say, income tax.
By the way, the following folks will be exempt from the penalty-tax:
- Those who make less than $9,500
- Employees whose employers only offer plans that cost more than 8% of the employee's income
- Those with "hardships"
- Members of Indian tribes
- Members of certain religions that don't pay Social Security tax, such as Amish, Hutterites or Mennonites
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12 comments:
(You didn't think Obamacare was free, did you?)
No, because only Republicans believe that government services should be free and that taxes should be zero. Everyone else is OK with paying taxes in exchange for the services they receive for the government.
Charlie nails it. Modern conservative thinking is that any and all taxes are bad, not understanding that taxes are necessary to fund infrastructure and services. Sure, I sometimes wince when I pay taxes and I hate to see government waste, but I also understand that I have to do this to help my fellow citizens.
As I've stated before: if there are people who cheat the system, or if a government program is wasteful or even corrupted, that doesn't mean you throw the baby out with the bathwater.
An even better analogy of conservative thinking: is it better that an innocent man be condemned to death if it means all the guilty are punished or is it better that a guilty man go free and all of the innocent are spared?
The hard right will cook the occasional innocent man every time.
Also, I loved this: "Those with "hardships""
You know who lacks empathy? Sociopaths.
You know who else? Corporations.
.
gruaud = full of shit!
"By the way, the following folks will be exempt from the penalty-tax:"
* Those who have insurance.
(This is not something that one overlooks by accident.)
For the financially able: Responsible people buy health insurance; irresponsible people gamble that they won't get sick/injured. But too often they are gambling other people's money.
What do the Bush tax cuts expiring have to do with this?
I can't figure out why the Republicans haven't moved aggressively to separate health insurance from employment. It's a huge burden on employers, and Republicans hate those.
And if the public had any clue whatsoever as to how much their "employer provided" health care costs, they'd be on board with Medicare for all in a heartbeat.
Employer-provided health care hides the costs from the people who are actually paying them - employees.
Why on Earth would any good, red-blooded American Republican have to pay the penalty? Isn't that just for freeloaders who don't have insurance because they don't believe in personal responsibility? By their own definintions, it should be all Democrats that end up paying the penalty.
@Anon
By their own definintions, it should be all Democrats that end up paying the penalty.
I can see it now on my 1040 what is your party affiliation? What a joke or is it?
I need to make some changes to their chart- if you carry insurance here are the taxes:
Less than $9,500 income = $0
$9,500 - $37,000 income = $0
$50,000 income = $0
$75,000 income = $0
$100,000 income = $0
$125,000 income = $0
$150,000 income = $0
$175,000 income = $0
$200,000 income = $0
Notice how as the email goes on, they leave out the "if you don't carry insurance" provision.
A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%-
Wow - 18.8% tax on income from dividends!
That's dreadful! That's horri-
Wait a minute - doesn't the average person who WORKS for a living pay a 28% marginal rate on their SALARIES or WAGES?
Somehow, I find it difficult to weep for the injustice being visited on people who get their money because they have money already...
I hate ACA, but who's the "most responsible" for it happening?? Why it's heavily propogandized conservatives, especially those in the Koch-funded "Tea Party," who *screamed, yelled, ranted & hollered* at Town Halls in the summer of 2009 about teh eeeevuls of Nazi-Obama who was visiting "Death Panels" on them.
The "Tea Partiers" didn't want no Medicare for all, much less a Single Payer Plan. Why that would've been Communism! Socialism! Nazism! Leninism (or my favorite: Lenonism)! Marxism! and all those other teh eeevul LIEbrul "isms" that the "Tea Partiers" shouted about. Did those conservatives even know what they were screaming about?? Extremely doubtful, other than that Boss Limbaugh *directed* the Pavlov Dogs to scream, rant, tirade & throw shit-fits because that "N" word in the White House was "doing something" and they sure didn't like it.
Don't like ACA? Well then maybe conservatives shouldn't vote for Willard Rmoney then, because ACA is pretty similar to Rmoney-Care in Taxachussetts, and ACA was written by the conservative Heritage Foundation.
But hey, why get all Fact-y when it's so much more fun to throw temper tantrums about that "N" word in the White House? Isn't THAT what this lying screed is really all about?
P.S. Gruaud is right on the money, btw. If you don't like the truth, then this blog site ain't for you sissies who'd rather be told fairy tales that make you feel better bc you're whitey white white...
Many are sad because of the increase of tax. Some people can already see the future effects that can happen with it. It is already here and there is nothing else we can do.
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