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Huh? I didn't get the memo on this, a trillion dollar tax hike?
On January 1, regardless of the outcome of fiscal cliff negotiations, Americans will be hit with a $1 trillion Obamacare tax hike.
Obamacare contains twenty new or higher taxes. Five of the taxes hit for the first time on January 1. In total, Americans face a net $1 trillion tax hike for the years 2013-2022, according to the Congressional Budget Office.
The five major Obamacare taxes taking effect on January 1 are as follows:
The Obamacare Medical Device Tax: Medical device manufacturers employ 409,000 people in 12,000 plants across the country. Obamacare imposes a new 2.3 percent excise tax on gross sales – even if the company does not earn a profit in a given year. In addition to killing small business jobs and impacting research and development budgets, this will increase the cost of your health care – making everything from pacemakers to artificial hips more expensive.
The Obamacare Flex Account Tax: 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 will face a new government cap of $2500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Currently, the accounts are unlimited under federal law, though employers are allowed to set a cap.)
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 several million 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. This Obamacare tax provision will limit the options available to these families.
The Obamacare Surtax on Investment Income: This is a new, 3.8 percentage point surtax on investment income earned in households making at least $250,000 ($200,000 single).
The Obamacare “Haircut” for Medical Itemized Deductions: Currently, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). This tax increase imposes a threshold of 10 percent of AGI. By limiting this deduction, Obamacare widens the net of taxable income for the sickest Americans. This tax provision will most harm near retirees and those with modest incomes but high medical bills.
The Obamacare Medicare Payroll Tax Hike: The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate instead. This is a direct marginal income tax hike on small business owners, who are liable for self-employment tax in most cases.
This has pretty much been lost in all the "cliff" debate, Huh?
But it does keep everyones eyes off the ball.
Quote:
"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."
"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."
Barack Obama
That looks vaguely familiar. Where have I seen i...
As I recall, did the liar in chief not say he would not raise taxes on anybody making less than 250k. Just another of many lies he has told to dupe those most easily duped, the simple minded.
Your source grossly mischaracterizes the surtax on investment income. That is an issue that I have been following very closely for obvious reasons. It is not a tax on all investment income for those making over $250k.
For an individual1, the 3.8% surtax is imposed on the lesser of:
(i) “net investment income” (NII), or
(ii) the excess of “modified adjusted gross income” (MAGI) over a certain threshold
amount.
Here are the threshold amounts:
Married filing jointly, or Qualifying Widow[er] $250,000
Single, Head of Household $200,000
Married filing separately $125,000
The much more troublesome provision is on Trusts.
For trusts and estates, the 3.8% surtax is imposed on the lesser of:
(i) undistributed NII, or
(ii) the excess of adjusted gross income over a threshold that in 2013 will be about $12,000.
So if you have a trust(s) for your kids that has any assets of any substantial size, you may want to undo the trust and look at alternative ways to provide for them. I'm in the process of evaluating that option right now. I have two trusts for my kids, one has about eight more years to go, the other about 13. But both are in great grad school professional programs, have very good judgment, and doing well. Just not sure whether to turn them lose with seven figures each or not. Tough call.
$1 Trillion Obamacare Tax Hike Hitting on Jan. 1
