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Adding Up the New Taxes of ObamaCare

Saturday June 30th, 2012   •   Posted by Craig Eyermann at 11:14am PDT   •  

Now that the Supreme Court has declared that the Patient Protection and Affordable Care Act, a.k.a. “ObamaCare”, can only be considered to be constitutional under the Congress’ power to tax Americans, how much will Americans see their taxes go up once the law goes fully into effect? And will it only affect people with incomes over $200,000 (if single) or $250,000 (for families) as President Obama promised? Or will it hit a lot more people with a lot lower incomes closer to home?

We’ve tapped data that the Americans for Tax Reform advocacy group has put together detailing the full list of ObamaCare’s tax hikes to produce the following table, where we’ve identified the tax hikes that are projected to add at least $100 million per year to the U.S. Treasury’s coffers once they go into effect.


Description of “ObamaCare” Tax Year Effective Estimated Annual Tax Collections Who is negatively affected by the tax?
Impose 3.8% Medicare Hospital Insurance payroll tax on investment income for individuals earning over $200,000 a year or households earning over $250,000 a year. 2013 $17.6 billion High Income Earning Individuals
Impose a 40% excise tax on “Cadillac” health insurance plans that cost more than $10,200 for single individuals or $27,500 for families. 2018 $16.0 billion Consumers/Individuals
Increase combined employer/employee Medicare Hospital Insurance payroll tax on individuals with incomes over $200,000 a year and families with incomes over $250,000 a year from 2.9% to 3.8%. 2013 $12.4 billion Businesses and High Income Earning Individuals
Impose new excise tax on individuals to either buy health insurance or employers to offer it to their employees or pay penalty (tax). 2014 $10.8 billion Individuals/Businesses
Impose a fee (tax) upon health insurance providers based on each individual company’s share of the total market. 2014 $10.0 billion Health Care Suppliers (Costs passed along to Consumers/Individuals)
Impose a new 2.3% excise tax on U.S.-manufactured and imported medical devices costing over $100. 2013 $2.9 billion Consumers/Individuals
Increase “black liquor” bio-fuel tax. 2010 $2.4 billion Consumers/Individuals
Increase income tax collections from taxpayers with high medical expenses (over 7.5% of their adjusted gross income) who deduct their health care costs on their taxes. 2013 $2.2 billion Individuals
New fee (tax) on manufacturers and importers of non-generic prescription medication based upon their share of annual sales of these products. 2010 $2.2 billion Health Care Suppliers (Costs passed along to Consumers/Individuals)
Limit amount of pre-tax income that can be set aside in Flexible Spending Accounts to pay for expected annual health care expenses to $2,500 (previously unlimited.) 2013 $1.9 billion Individuals
Increase tax collections from businesses by eliminating the deductibility of paying for their retirees’ prescription drug coverage. 2013 $0.6 billion Businesses (Costs passed along to Consumers/Individuals)
Increase in existing income tax collections from no longer allowing non-prescription medication and other health care products to be paid for using pre-tax income set aside and saved by individuals to pay from their own expected or future health care costs using Health Savings Accounts or Flexible Spending Accounts. 2011 $0.6 billion Consumers/Individuals
Increase tax collections from businesses under current law by preventing them from being able to reduce their tax liability using lawful tax deductions or business strategies. 2010 $0.5 billion Businesses (Costs passed along to Consumers/Individuals)
New excise tax on indoor tanning services. 2010 $0.3 billion Consumers/Individuals
Increase penalty (tax) for withdrawing money from a Health Savings Account for non-medical early withdrawals. 2011 $0.2 billion Consumers/Individuals
Impose a maximum compensation limit for health insurance executives. 2013 $0.1 billion High Income Earning Individuals

Tallying up the annual increase the IRS will be looking to collect each year after the law is fully implemented, we find that the U.S. federal government expects to take in an additional $80.7 billion per year. Of that $80.7 billion, 37.3% ($30.1 billion) will come from high income earning individuals or their employers. The remaining 62.7% ($50.6 billion) will either be paid by people with lower incomes or will be passed along to consumers and individuals by businesses through higher prices.

Given the distribution of income in the United States, most of that increased burden will fall upon households earning between $49,455 and $250,000, which covers about 48% of all U.S. households. Coincidentally, this is the segment of the U.S. population that pays the vast majority of all income taxes collected by the U.S. government each year. It is also the segment of the U.S. population that considers itself to be middle class, which includes the $172,000 annual income for a federal government employee that President Obama himself described as being “relatively modest“.

With about 120 million households in the U.S. and 48% of that figure coming in at 57,600,000 households, that puts the average cost of ObamaCare per middle class household at $878.47. And that’s on top of all their other household expenses.

The only problem is that this figure is far short of what ObamaCare will really cost….

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June 2012