"Healthy" Tax Hikes From Senate Democrats

Our friends at Americans for Tax Reform have published a full list of the tax hikes that Senate Democrats passed Saturday night in their so-called "Health Bill." We know, President Obama promised no tax increases at all on the middle class, and most of these hit everybody. We'll hold our breath awaiting his veto. These tax hikes include:

Individual Mandate Tax (Page 324/Sec. 1501/$8 bil): 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):  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): 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$): Preamble to taxing health benefits on individual tax returns.

Medicine Cabinet Tax (Page 1997/Sec. 9003/$5 bil): 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): 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): Imposes cap on FSAs of $2500 (now unlimited).

Corporate 1099-MISC Information Reporting (Page 1999/Sec. 9006/$17.1 bil): 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$): $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): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax of Medical Device Manufacturers (Page 2020/Sec. 9009/$19.3 bil): $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): $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)

Raise "Haircut" for Medical Itemized Deduction from 7.5% to 10% of AGI (Page 2034/Sec. 9013/$15.2 bil) : 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)

Hike in Medicare Payroll Tax (Page 2040/Sec. 9015/$53.8 bil): 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.

Blue Cross/Blue Shield Tax Hike (Page 2044/Sec. 9016/$0.4 bil): 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): New 5% excise tax on elective cosmetic surgery to be paid by the surgery patient.