Republicans and Democrats can continue playing their charade they call “negotiations,” but no amount of pretend bickering will prevent Obamacare’s new tax increases from happening. Over the next 10 years, Americans will be subjected to $1 trillion in new taxes. Americans for Tax Reform summarized the top five taxes to be implemented on New Year’s Day.
The Medical Device Tax will levy a 2.3% excise tax on gross sales of medical device manufacturers regardless of profit amount. So, they might not profit at all, but their sales will still be taxed at 2.3%. This will contribute even more to the rising cost of healthcare.
The Flex Account Tax will be imposed on the “30-35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs.” FSA accounts will face a new government cap of $2,500, which will end up costing those with FSA’s over $13 billion over the next 10 years.
The Investment Income Surtax is a tax on something that’s already taxed, a double tax. Currently, capital gains and dividends are taxed at 15%, but with the New Year will come an increase of the capital gains tax to 20% and an increase of the dividends tax to 39.6%. On top of those new tax rates, a 3.8% surtax will be added bringing the capital gains rate to 23.8% and the dividends rate to 43.4%. Those couples making at least $250,000 and those individuals making at least $200,000 will be subjected to the new taxes.
The “Haircut” for Itemized Medical Deductions raises the medical expenses threshold from 7.5% to 10% of one’s adjusted gross income (AGI) in order to qualify for a tax deduction. According to ATR, “By limiting this deduction, Obamacare widens the net of taxable income for the sickest Americans. This tax provision will harm near retirees and those with modest incomes but high medical bills.”
The Medicare Payroll Tax increases the rate from 2.9% to 3.8% on all wages and self-employment profits of all those rich people who make more than $200,000 ($250,000 for rich married couples). Employers will continue to pay 1.45%, but employees will experience an increase to 2.35% if they exceed the threshold.
Increases in taxes will only further drive prices and healthcare costs up and bankrupt small businesses. These taxes will do nothing to help the economy, except for the economy of politicians who benefit by taking more and more money from hard-working Americans in order to buy votes from other people.