Published on October 22, 2009 at 7:12 AM
Over and over again, President Obama has promised not to raise "any form" of taxes on families making less than $250,000 per year. Yet, the U.S. Senate is getting ready to consider a government healthcare bill which does just that. Here's how:
Health Insurance Mandate Taxes on Working Families
- Individual Mandate Excise Tax. Americans who do not sign up for health insurance will have to pay an excise tax in the following range:
Single Family 100-300% of Federal Poverty Level 750 $1500 300+% of Federal Poverty Level $900 $1900
300 percent of the federal poverty line is well under $250,000. For a family of four, it's $67,000. For an individual, it's about $30,000.
- Employer Mandate Tax. $400 per employee if health coverage is not offered. Note: this is a huge incentive to drop coverage, as $400 is much less than the average plan cost of $11,000 for families or $5000 for singles (Source: AHIP)
Small businesses pay their tax liability on their owners' 1040 forms. This $400 employer mandate tax does not hold harmless business owners making less than $250,000
Tax Hikes on Healthcare Spending Accounts
- Cap on Flex-Spending Account (FSA) contributions at $2500: Currently, the contribution level is unlimited
- Medicine Cabinet Tax : Americans would no longer be able to purchase over-the-counter medicines with their FSA, Health Savings Account (HSA), or Health Reimbursement Arrangement (HRA)
- Increase in the Non-Qualified HSA Distribution Penalty from 10% to 20%: This makes HSAs less attractive, and paves the way for HSA pre-verification
There are 30 million Americans with FSAs. About 8 million Americans have an HSA. Virtually all of them make less than $250,000 per year. These are clear tax hikes on these families.
Denying a Tax Deduction for Medical Costs
- Increase "haircut" of medical itemized deductions from 7.5% to 10% of adjusted gross income (AGI), further denying medical itemized deductions
There is no exemption made here for families making less than $250,000 per year.
SOURCE Americans for Tax Reform