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December 09, 2012
ObamaCare taxes poised to hit next month
ObamaCare taxes poised to hit next month … Obama sneaks tax hikes in to hit post election
Even if lawmakers somehow stop the Bush-era tax rates from expiring, taxes are still expected to rise on Jan. 1 -- thanks to a trio of new fees tied to the federal health care overhaul.
The IRS this past week published rules for some of the first major taxes meant to help pay for President Obama’s massive insurance coverage expansion. Together, they will raise investment and income taxes on top earners and impose a separate -- and controversial -- tax on medical devices.
The bundle of fees has been largely overlooked as lawmakers and the White House bicker over the Bush tax rates, with Republicans demanding they be extended for everyone and Obama insisting rates rise for top earners. But that same group of earners is already in the crosshairs under the ObamaCare tax rules published this week.
Starting Jan. 1, investment income for individuals earning over $200,000 and households earning over $250,000 will be subject to a new 3.8 percent tax. Further, regular income above those thresholds will be hit with a .9 percent Medicare surtax. Should the Bush tax rates expire for those workers, those increases will be compounded.
But the rather obscure medical device tax is the one that has stirred the most controversy in Washington and the business community. This week, groups and lawmakers renewed their calls to repeal it as the IRS published its final rules.
“This week, the Internal Revenue Service outlined which medical supplies and technologies will be subject to a tax. Now, everything from latex gloves to pacemakers will become more expensive and in some cases, more scarce,” Rep. Tom Price, R-Ga., said in a statement. “The tax on medical devices harms America’s ability to conduct the necessary research and development to maintain our global competitiveness, resulting in the loss of tens of thousands of jobs and fewer groundbreaking innovations in this field. With millions of Americans unemployed, this simply makes no sense.”
The Affordable Care Act imposed the 2.3 percent tax on medical devices with the goal of raising nearly $30 billion over the next decade.
Equipment makers, though, argue that the tax ends up being much higher than that since it’s on gross sales. One industry spokesman estimated earlier this year that the impact on actual earnings is more like 15 percent.
Already, some have warned that the tax will stifle growth. Indiana-based Cook Medical earlier this year announced it was scrapping plans to open five new plants because of the tax.
The Republican-controlled House voted over the summer to repeal the tax, but the Senate never took it up.
The administration, though, has defended the provision. According to the Treasury Department, the medical device companies actually stand to benefit from the law. Though the 2.3 percent tax hits the industry, the department argues that the millions of new health care customers insured as a result of the law will increase the demand in hospitals to order more equipment -- in turn boosting medical device companies' profits.
That’s not how the industry sees it. Stephen J. Ubl, president of the Advanced Medical Technology Association, said this week in response to the IRS rules that the tax could cost thousands of jobs – and is already causing companies to lay off workers and cut back on research and development.
“While Washington talks about a fiscal cliff, this tax could push us off an innovation cliff, costing as many as 43,000 jobs and hurting the ability of medical technology companies to find tomorrow’s treatments and cures. It should be repealed,” he said.
It’s unclear whether any of the ObamaCare taxes could be reduced or delayed as part of a deal to avert the looming fiscal crisis. So far, negotiations have centered on the Bush tax rates, overall tax reform and entitlement cuts.
The House Republican counter-offer unveiled this past week did not mention the health care taxes.
Meanwhile, the health insurance industry is already raising alarm about an ObamaCare tax on health insurers taking effect in 2014. America’s Health Insurance Plans says that cost will be passed onto the consumer, leading to another $2,000 in premium costs over the next decade for the average individual purchaser.
Wild Thing's comment................
I have lost two friends because of socialized medicine. One in England and one in Canada. And now we are going to have socialized medicine here in the USA.
Where is the outrage that the politicians are not subject to Obamacare. I don't understand why people are not upset about this.
Posted by Wild Thing at December 9, 2012 12:55 AM
Comments
My inlaws are in Germany and having difficulties getting the medications they are prescribed by their physicians because the health care boards believe they are too old.
Posted by: David Lamberson at December 9, 2012 06:28 PM
