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  • The House Health Care Bill: A $700 Billion Tax Hike

    The New House Health Care Plan has several tax increases that will cost taxpayers $700 billion in the next ten years. Several of these taxes are new and were not in the earlier House bills.

    The Surtax
    The new Pelosi plan establishes a 5.4% surtax on joint filers with over $1 million in adjusted gross income or $500,000 for single filers. This is a single rate, which is different from the earlier House bills that had surtaxes at lower income levels. This surtax is not based on final adjusted gross income, but instead modified gross income. Thus the effective rate of the surtax is higher than just increasing marginal tax rates by 5.4%.

    This surtax is also not indexed to inflation. This will cause more and more taxpayers to be hammered by the surtax even as their real income does not increase. This is one of the reasons that the Joint Tax Committee expects the cost of the surtax to more than double in year 10 of its estimate to $68.4 billion from $30.9 billion in 2011. The Joint Tax Committee estimates that taxpayers will be forced to pay $460.5 billion in higher taxes due to this provision. This is a larger tax increase than the 1993 Clinton income tax increase provisions that created a new tax bracket for high income taxpayers, increased the AMT, limited deductions and exemptions for high income earners.

    Business Taxes
    Businesses could pay a penalty of 8% on the average wage of their employees if they do not offer qualified health insurance. Small businesses with less than $500,000 in total payroll will be exempt from the business. Businesses with total payroll from $500-$750,000 will pay less than the full 8% depending on their total payroll size.

    Business Rate Table
    Does not exceed $500,000 ………………………….0 percent
    Exceeds $500,000, but does not exceed $585,000 2 percent
    Exceeds $585,000, but does not exceed $670,000 4 percent
    Exceeds $670,000, but does not exceed $750,000 6 percent

    Copying Baucus
    The House bill copies the Baucus framework of having several small tax increases in an effort to raise additional income. For example, the House bill now also limits Flexible Spending Accounts to $2500 and limits the ability of FSA or HSAs to purchase goods by excluding over the counter drugs.

    Here is a full list of the additional House tax increase items and their cost:
    1. Health Savings Account Tax: Increases tax on health savings account funds not used for medical purposes from 10% to 20%. ($1.3 billion)
    2. Flexible Spending Arrangement Cap: Caps contributions to flexible spending accounts at $2,500. ($13.3 billion/ ten years)
    3. Medical Devices Excise Tax: Imposes 2.5% excise tax on sale of medical devices. ($20 billion/ ten years)
    4. Self-Insured Health Fee: Imposes fee on insured and self insured health plans.
    5. Itemized Deductions Definition: Conforms the definitions of medical expenses from employer-provide health insurance, merging flexible spending arrangements, health reimbursement arrangements, health savings accounts and archer MSAs to the definition of itemized deduction. ($5 billion/ ten years)
    6. Medicare Part D: Eliminates deduction for expenses that can be allocated to the Medicare Part D subsidy. ($3 billion/ ten years)
    7. Payments to Corporations: “Requires information reporting on payments to Corporations” ($17.1 billion/ ten years)
    8. Worldwide Interest Allocation: Delays implementation of interest allocation. ($26.1 billion/ ten years)
    9. Treaty Benefits Limit: Limits the treaty benefits for some deductible payments. ($7.5 billion/ ten years)
    10. Economic Substance Payments: Codifies economic substance doctrine and imposes penalties for underpayments. ($5.7 billion/ ten years)

    Posted in Obamacare [slideshow_deploy]

    17 Responses to The House Health Care Bill: A $700 Billion Tax Hike

    1. Pingback: Heritage Foundation – House Healthcare Bill a $700 Billion Tax Hike

    2. b nuckols Texas says:

      Absolutely designed to kill patient ownership of their health care, to run self insured and non-profit insurances out of business and to kill any hope of choice.

    3. Bill Smith says:

      Is the $1.3B figure in item 1 an annual figure or an aggregate over 10 years?


    4. Mike Brasovan, Fort says:

      Is there anywhere we can get more information on Items 1 through 10 above? I understand some of them but the rest seem to have to to do with some arcane income tax rules. For Example – what are 9 and 10 talking about? What is the Economic Substance Doctrine? If nothing else, these kinds of games point us more towards the FairTax!

    5. Freedom of Speech TX says:

      The House Ways and Means Committee.

      We'll find a way and we have the means…

      Not if they don't run the committees.

      Vote intelligently in 2010!

    6. Pingback: Morning Bell: The Pelosi Blueprint for Government Run Health Care | Fix Health Care Policy

    7. Pingback: The Pelosi Blueprint for Government Run Health Care « Conservative Thoughts and Profundity

    8. Pingback: The Greenroom » Forum Archive » Democrats Admit: Our Health Care Proposal is a Cluster***

    9. Change, Houston TX says:

      i understand the people with vested interests in the status quo screaming bloody hell about change. the ones i do not get are the misguided who think the elite conservatives have them in mind when they wail against Obama and the Democrats. It is always amusing to hear the people that would benefit from policy changes echo what rich and powerful conservatives rightfully advocate for themselves. i think folks get caught up in wanting to belong to the clique they aspire to be in.But they forget that the big shots are,at the end of the day, just trying to find more ways of fattening their deep pockets. They know how to shape the debate,and the aspiring "conservative" eats it up.

    10. Pingback: Morning Bell: The Pelosi Blueprint for Government Run Health Care | Conservative Principles Now

    11. Freedom of Speech TX says:

      Change Houston,

      Most of us, I believe, do not think that "elite conservatives have us in mind".

      There is one point. We are going to do everything we can do to "screen" politicians and demand conservative values beginning with taxation, spending, and a balanced budget.

      If these people lie, then in two years in th House Elections, we need to get rid of them

      No one said democracy was easy. What would YOU have us do? Just give up? Just accept the same garbage from both sides?

      This old boy (and old girl) way of doing politics has got to be challenged before there is no Republic left.

    12. Pingback: House Democrat: Pelosi Plan Raises Taxes And Funds Abortion | Fix Health Care Policy

    13. Pingback: House Democrat: Pelosi Plan Raises Taxes And Funds Abortion « Conservative Thoughts and Profundity

    14. Pingback: True cost of Obamacare - skicougar’s blog - RedState

    15. Tom P. Miami, FL says:

      How bad is Obama's health care reform bill??? Just remember Obama's promise of "transparency," and the sound bites of him saying that legislation would be available on the internet for 5 days, FIVE d a y s before a bill would be passed under his administration. This DID NOT HAPPEN with the health care reform bill. Also remember Nancy Pelosi's sound bite or her saying "we need to pass the bill so people can find out what is in it." All too obvious that democrats have intentionally tried to shield the public from knowing many of the nasty details in this bill. Pelosi reluctantly admitted that all Americans would be forced to buy health insurance, or pay a fine or be incarcerated.

    16. Pingback: Pressure In Medical Device Commercialization | Medical Device Consultants Blog

    17. VeteranPatriot says:

      Under another 4 years of obama , the economy will collapse and America’s wealth will have been redistributed. High heating fuel, electricity will be scarse because Obama will gut the coal fire plants that create 40 to 55% of Americas electric. Coal will be a thing of the past for America. Consumer item’s will be imported. but few will be able to afford them. Food prices will go through the roof, and home gardens will be outlawed. America military will be de funded and IOO’S OF MILLIONS OF AMERICANS WILL BE UNEMPLOYED AND HOMELESS. Terroism in America will be the norm. We will be under a dictatorship, broke, hungry and dieing. Dr.’s will close their doors and health care will be basic. Social security gone, your IRA’S & 401 K’s ARE MANAGED AND STOLEN BY THE GOVERNMENT. more to come

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