Sen. Lincoln Casts Deciding Vote to Raise Healthcare Taxes

Sen. Lincoln Casts Deciding Vote to Raise Healthcare Taxes

At least 18 tax hikes in Senate health bill; bill contains the word “tax” 183 times

WASHINGTON, D.C. On Saturday evening, Sen. Blanche Lincoln cast the deciding vote in favor of the following tax increases contained in the Reid-Obama government healthcare bill:

Individual Mandate Tax (Page 324/Sec. 1501/$ 8 bil/Jan. 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the following schedule (capped at 8 percent of income):

Single Single +1 Single +2<
2014 $95 $190 $285
2015 $350 $700 $1050
2016 etc. $750 $1500 $2250

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS).

Employer Mandate Tax (Page 348/Sec. 1513/$28 bil/Jan. 2014):  If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $750 for all full-time employees.  Applies to all employers with 50 or more employees.

If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).

Excise Tax on Comprehensive Health Insurance Plans (Page 1979/Sec. 9001/$149.1 bil/Jan. 2013): Starting in 2013, new 40 percent excise tax on “Cadillac” health insurance plans ($8500 single/$23,000 family).  Higher threshold ($9850 single/$26,000 family) for early retirees and high-risk professions.  CPI +1 percentage point indexed.

From 2013-2015, the 17 highest-cost states are 120% of this level.

Employer Reporting of Insurance on W-2 (Page 1996/Sec. 9002/Min$/Jan. 2011): Preamble to taxing health benefits on individual tax returns.

Medicine Cabinet Tax (Page 1997/Sec. 9003/$5 bil/Jan. 2011): No longer allowable to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin)

HSA Withdrawal Tax Hike (Page 1998/Sec. 9004/$1.3 bil/Jan. 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

FSA Cap (Page 1999/Sec. 9005/$14.6 bil/Jan 2011): Imposes cap on FSAs of $2500 (now unlimited).

Corporate 1099-MISC Information Reporting (Page 1999/Sec. 9006/$17.1 bil/Jan. 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers

Excise Tax on Charitable Hospitals (Page 2001/Sec. 9007/Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS.

Tax on Innovator Drug Companies (Page 2010/Sec. 9008/$22.2 bil/Jan. 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Medical Device Manufacturers (Page 2020/Sec. 9009/$19.3 bil/Jan. 2010): $2 billion annual tax on the industry imposed relative to shares of sales made that year.  Exempts items retailing for <$100.

Tax on Health Insurers (Page 2026/Sec. 9010/$60.4 bil/Jan. 2010): $6.7 billion annual tax on the industry imposed relative to health insurance premiums collected that year.

Eliminate tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Page 2034/Sec. 9012/$5.4 bil/Jan. 2011)

Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI (Page 2034/Sec. 9013/$15.2 bil/Jan. 2013): Waived for 65+ taxpayers in 2013-2016 only

$500,000 Annual Executive Compensation Limit for Health Insurance Executives (Page 2035/Sec. 9014/$0.6 bil/Jan. 2013)

Hike in Medicare Payroll Tax (Page 2040/Sec. 9015/$53.8 bil/Jan. 2013): Current law and changes:

Wages (Employer/Employee)

Self-Employment Net Income

Current Law and New Rate on First $200,000 ($250,000 MFJ)

1.45%/1.45%

2.9%

New Rate on Amount Which Exceeds $200,000 ($250,000 MFJ)

1.45%/1.95%

3.4%

The 0.5% new rate addition is not deductible for the self-employment tax adjustment.  The new HI tax threshold is not indexed for inflation.

Blue Cross/Blue Shield Tax Hike (Page 2044/Sec. 9016/$0.4 bil/Jan. 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services

Tax on Cosmetic Medical Procedures (Page 2045/Sec. 9017/$5.8 bil/Jan. 2010): New 5% excise tax on elective cosmetic surgery to be paid by the surgery patient

Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases.  For more information or to arrange an interview please contact John Kartch at (202) 785-0266 or by email at [email protected].

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AMERICANS FOR TAX REFORM

CONTACT:  JOHN KARTCH

202-785-0266; [email protected]

23 NOVEMBER 2009