Before the new health care law’s first federally mandated Band-Aid is even unwrapped, there is already a long list of new taxes and tax hikes threatening American families, businesses and investors beginning in six months. This list is detailed in a release from tax policy think tank and watchdog group Americans for Tax Reform. ATR divides these new and higher taxes due next year into three distinct phases. One phase is devoted entirely to the coming multifaceted tax load arising from the Democrats’ government health care measure signed into law earlier this year (with John Hall’s enthusiastic support).
The first wave, of course, will be the death of the 2001 and 2003 tax cuts on New Year’s Day, fulfilling a long-time goal of Nancy Pelosi, John Hall, and Congressional Democrats. Never mind that those tax cuts helped pull us out of the post-dotcom bubble, post-9/11 economic plunge. The third wave, expected by the April 15 filing deadline, will include the Alternative Minimum Tax and various taxes on employers; the former will multiply the number of families paying outrageous AMTs by over 700% over last year, and the latter will shackle businesses’ ability to create jobs and hire people.
Between these two waves, however, comes the avalanche of new taxes triggered by the Obama/Pelosi/Reid health care law. ATR describes the onslaught:
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able 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).
The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
The HSA Withdrawal Tax Hike. This provision of Obamacare increases the 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.
How ironic that the so-called Affordable Care Act, which purports to help people pay for their health care, depends so much on taxing and overregulating the money in accounts that people have saved and invested carefully on their own so that they could — that’s right — pay for their health care. And the reason for the changes in the rules for pre-tax accounts is cruel: it is strictly to take more of our citizens’ money to pay for the federal scheme. Those who are being newly taxed will not experience a commensurate increase in benefits; they will lose benefits. And John Hall thinks this is all fine. Hardly a surprise that 60% of Americans still want this law repealed.
Congressman Hall will be at Hudson Valley Hospital in Cortlandt tomorrow (Friday, July 9) at 3:00pm for a public forum on how businesses are to prepare for the health care law’s coming implementation. He says he’ll be taking questions. If you have any, and you can be in the vicinity of upper Westchester on Friday afternoon, we’ll see if he has answers.