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  • Obama’s Health Plan Has Dangerous New Taxes

    The health care plan President Obama recently released is mostly a combination of the different plans passed by the House of Representatives and the Senate. But in one major way it breaks with long-standing precedent, proposing a fundamental wrong-headed change to both entitlement policy and tax policy. He proposes for the first time to tax capital income to support entitlement programs.

    Payroll taxes have always applied just to wages and salaries and the revenue those taxes raise has gone solely to pay for entitlements like Social Security and Medicare. The deal has always been that we pay payroll taxes during our working years and receive the benefits they fund after we retire. President Obama’s health care plan would shatter this compact forever.

    The Hospital Insurance (HI) portion of the payroll tax is 2.9 percent on all wages and salary that is paid half (1.45 percent) by workers and half (the remaining 1.45 percent) by employers. It is supposed to pay only for the hospital insurance portion of Medicare benefits that retirees receive. President Obama’s plan adopts this break with long-held policy and doubles down by further severing the link between HI and Medicare benefits. Obama’s plan not only increases the HI tax on wages and salaries for high-income earners similar to the Senate bill, it also applies the HI tax to investment income for the first time. Obama’s unprecedented plan would levy the current 2.9 percent HI tax on what the administration obnoxiously refers to as “unearned” income, which includes capital gains, interest, dividends, annuities, royalties and rents for families earning more than $250,000 a year ($200,000 for single filers).

    Applying the HI tax to investment income would also continue to transform entitlements and how they are paid for. Using the revenue raised by levying the HI tax on investment income would open the floodgates for future rate increases to pay for other new spending programs. Adding a new revenue stream for Congress to tap when it needs more money is always dangerous and should be resisted at all costs, otherwise expanding government will be too easy for Congress.

    Yet this is likely the reason President Obama wants to levy the HI tax on investment. Applying the HI tax separately to investment income will forever give Congress yet another tax to hike whenever it wants to fund a new program. If Congress can raise payroll taxes easily to pay for any spending it desires, payroll taxes will no longer be used to pay for entitlements, but as an ATM for Congress to go back each time it needs more cash.

    Posted in Obamacare [slideshow_deploy]

    33 Responses to Obama’s Health Plan Has Dangerous New Taxes

    1. Ozzy6900, CT says:

      Wait a minute! I thought President Obama said no new taxes on people earning $250k or less a year! I guess this is just another lie from the White House to add to all of the others.

    2. James NC says:

      So, the problem is? Shouldn't income be taxed the same no matter the source? Looks like folks with these forms of income have had it pretty good so far, now they may have to actuly pay their share.

    3. Pingback: Obama Updates His Healthcare Plan – Third Time’s The Charm? | Tax Talk Plus

    4. Missouri says:

      I would love to see one gutsy politician go into this 2 bit summit and propose an amendment that ALL government employees (that means Congress) MUST drop their citizen paid insurance and MUST sign on to the messiah's health care proposal.

    5. Gary Wilson, Toledo, says:

      It should only be a surprise that he has waited this long to unveil a new tax on a new revenue stream. This man has no understanding of business and how this economy works.

    6. Richlee Nevada says:

      Missouri

      In 2009 Nevada Republican Rep Dean Heller Proposed a House amendment to the House HealthCare Bill – so all Government Employees & Politicians would be forced to be in Government HealthCare Plan – The Democrats killed the proposed amendment.

      Republicans also proposed amendments that would

      1) Excluded Illegal aliens from coverage.

      2) Include Tort Reform

      3) Exclude federal funding of Abortion Coverage

      4) require bills to be posted 72 hours before being voted on

      All of these proposed amendments were killed by the Democrats – as well as others.

      Obama proposed open minded meeting 2/25 to get Republican Ideas is a ruse to put them on the spot and make them look bad. He is not going to change his agenda – which is making everyone dependent on the government and under government control with promises of "Free Stuff" that will wind up costing all citizens their freedom.

    7. Jeanne Stotler,Woodb says:

      On Mark Levin's radio yesterday,2/23, he had a guest who was explaining how all of this is UNCONSTITUTIONAL, I had to go into a meeting so missed a lot and his explanation of why other than that reconsiliation could not be used and he gave the reason as to why it cannot be tied to budget. We need to watch this carefully.

    8. Carol, AZ says:

      Yes we will all pay higher taxes passed-on to all Americans who are lucky enough to still have jobs.

      Don't believe that this will be a tax levy, for the income range of, $200,000 to $250,000 .

      The over- run cost of doing Buss. will quickly debased those loosey, goosey guildlines.

      The Gov't can not currrently pay for all entitlement cost now.

      The whole point of any H.C. Proposal is to pass on all cost of entitlements to Americans.

      Whom do you think will contimue to pay for all the uninsured, the SSI payments , Medicaid payments in kind, for over 8 million non-legals living here , now receinving free health care ?

      Have we all fallen down the rabbit hole with our 3-D glasses over this issue and the continued fleecing of America?

      Certainly reforms is needed in our current system.

      We all agree here.. But one has nothing to do with the other.

      That is the tragic fact about this topic.

      Not one Health care insurer has ever stepped forward and presented a proposal based-on any aspect of doing Buss. for the benefits of their clients.

      If you haven't heard, several have announced rate increases this week of 28% .

      Need I remind everyone that their profit margins are somewhere around 400% a month.

      And while our leadership is spending months on this terrible idea we have awarded a $8 million dollar contract to China, for the production of solar blades to help stimulate their economy under the banter of creating more jobs for Americans.

      Our leadership clearly has taken us all down the rabbit hole which grows deeper with every decison.

    9. Brian Towersey Pebbl says:

      This dosnt suprise me a bit….be prepared for more tax increases.

    10. Gail, Texas says:

      A bill requiring what you wish was introduced in the House at least three times. My Congressman introduced it one time. However, gues what? The measure could not be passed by the House. I do not want to be governed by the elite anymore.

    11. Lloyd Scallan - New says:

      Why does this latest Obamacare plan surprise anyone. I'll say it again, it is most destrubing that so many Americans do not see who and what Obama is and what he intends to do to this counntry,

    12. Greg, Albuquerque, N says:

      For James -

      If you think those who invest, operate rental properties, etc. have had it well/easy and that now they will have to pay their fair share you are showing you lack of understanding how the system works. When we business owners or commercial property owners WORK, we are responsible for assuming all of the risk for our operations. Importantly, unlike the 9-5 worker, we are on call 24/7 365. We have to handle the legal, the regulated, the personnel (heath, retirement, taxes, etc) issues for the entire company. A 40 hour work week would be great but it is not in the cards for most investors/operators.

      Then, should we find that we are unable to make a profit and must liquidate (note: in many states there is what is called a "Gross Receipts Tax" which forces us to pay the government taxes for the "privedge" to operate a company in their juristication – means we pay the state before we pay ourselves – fair right?). When we fail at our endeavors, we often lose our investments when forced to sell company assets, we are not elligible for "unemployment benefits", and the government government limits what we can right off against any other source of income.

      So instead of taking the position of wanting to stick it to the other guy, grow up and see that government spending to provide benefits to people who don't earn them is a form of "greed" we truly can't afford. (Should you doubt this I point you to the National Debt).

    13. Duane Phinney Pensac says:

      60% of Americans pay little or no taxes, but receive 90% of the benefits.

    14. John B. San Diego says:

      A New Tax wow big surprise ……Right?? Tax on Capital Gains will accomplish one thing, investors will move offshore with invetment capital and banking just as manufacturing and industry has done to avoid this hostile environment.

      These so-called elected officials, sorry I meant rulers, don't have a clue about what made America great, they are riding on the backs of what was once free market capitalism to install Marxist/ socialist programs that will not last two generations.

      When it fails guess what, we get to start all over again from the ashes of what used to be our beloved Free Republic.

    15. Cory, Wisconsin says:

      Does this mean that when our investments lose money and there are no capital gains, that the government will rebate an appropriate amount?

    16. John B. San Diego says:

      I am sorry line two paragraph one "inventment capital" was to have read "inveterate capital" delete both post and I will rewrite both at your discretion

      Heritage

    17. Ben C. Ann Arbor, MI says:

      James from NC. obviously you don't understand tax law. The only income that might be exempt from income tax is life insurance (you have to die first), or tax exempt municipal bonds and other investments that are legally tax free. Everyone pays tax on everything else. Perhaps you will admit to some "spin" from the POTUS.

      The problem is that legislation of this kind, Social Security being the poster child, never stays as intended. If you study the changes that have occured since its inception you will find that Social Security has morphed into the monser it is today. It is the "morphing" of any legisaltion that worries us. What may be signed into law today will become a monster for which the next generations must deal. But you will likely be dead so why should you care – right?

    18. John B. San Diego says:

      A New Tax? Wow, what a big surprise ….Right?

      Tax of 2.9 % increase on Capital Gains will accomplish one thing, investors will move offshore with their inveterate capital and investment banking. Just as manufacturing and industry has done to avoid this hostile taxing environment President Obama proposes, so will investors leave America.

      These so-called elected officials, sorry I meant rulers, don't have a clue about what made America great, they are riding on the backs of what was once free market capitalism to install Marxist/ socialist programs that will not last two generations.

      When it fails; guess what, we get to start all over again from the ashes of what used to be our beloved Free Republic.

    19. Pingback: Obama’s Health Plan – Taxes, Taxes Everywhere | The Foundry: Conservative Policy News.

    20. Pingback: Obama’s Health Plan – Taxes, Taxes Everywhere | Fix Health Care Policy

    21. Pingback: Obama’s Health Plan – Taxes, Taxes Everywhere | Conservative Principles Now

    22. Texan2010, TX says:

      Carol, insurance companies do NOT have profit margins of 400%.

      According to the most recent Fortune 500 rankings, health insurers rank 35th among United States industries, with a profit-margin of just 2.2 percent. None of the ten largest American health insurers made profits of more than 4.5 percent, and two of them lost money.

      Insurance rates go up as health care costs go up, which they will certainly continue to do if Obama's plan passes and the feds mandate that ALL insurance policies cover every conceivable condition (this is why some states have astronomical insurance rates and others like Texas do not). But wait – Obama also wants to control insurance prices. So if companies are prohibited from raising prices to cover their rising costs of doing business, they will go out of business.

      When government both sets the prices and defines the benefits, that is the very definition of a government takeover.

    23. Carol, AZ says:

      TX/ RSVP

      Thank you for your input:

      My research regarding the "big five" carriers reported profit increases, of 56% , in some cases higher .

      There are slightly over 1000 carriers currently in the market place.

      Certainly they would not stay in Buss very long if they did not have a profit at the end of their balance sheets.

      2.2 % is not even close to what I'm reading, but thank you for passing along this stat….

      With regards to your other parp. we certainly do agree.

      I am also passing along with regards to your State, Texas, the medical cost over runs , where you have stated ; "cost are kept low..

      Cost over- runs in" 2006 reported by your "State's Controller, was "$1.3 B." for the uninsured in Texas, passed on to you ….. . Since it is now 2010 you do the math.

      THE sad truth with leadership from D.C. to address any reform to cut costs in support , of the best Health care system in the world, is where we all have all lost our way over this issue. Reform the system from within.

    24. Pingback: Must Know Headlines 2.25.2010 — ExposeTheMedia.com

    25. Pingback: Obama’s Health Plan – Taxes, Taxes Everywhere | Step Down Obama

    26. Diana, Arkansas says:

      Duane Phinney 60% of Americans pay little or no taxes…

      It is not possible to pay little or no taxes. Even the illegals and immigrants on welfare pay lots of taxes. This is because everything is taxed, one way or another. High transportation fuel costs are mostly taxes and are passed on even if you buy no gasoline. Renters pay their landlord's taxes. Businesses are fleeing the country because of taxes, regulations (more taxes), and punishments (more taxes). All of this is passed on to the consumer.

      This looks to me like another ruse to divide the citizens; another example of the classic socialist class envy. "No income taxes" does not equal "no taxes". This entire "healthcare" scam is all about more and more taxes. And power.

      I'm tired of this whole healthcare "debate". The real issues are being ignored just by engaging this so-called issue. I get along without 'health' insurance just fine, thank you.

      There needs to be less taxes and government for everyone.

    27. Chuck In Larkspur, C says:

      Only one or two pages are required to reform health care:

      I. ALLOW INSURANCE COMPANIES TO SELL ACROSS STATE LINES

      A. Purchasers will seek out the best insurance companies with the best coverage.

      B. Insurance companies will have to lower their prices to be competitive in markets that have more insurance companies competing for their customers.

      II. DO NOT ALLOW THE INSURANCE COMPANY TO “DROP” A PAYING CUSTOMER FOR ANY REASON

      A. Preexisting conditions;

      B. Reaching annual or lifetime dollar limits;

      C. Renewals are “automatic” if customer’s payments have been timely.

      D. Etc.

      III. DO NOT ALLOW INSURANCE COMPANIES TO DISALLOW TREATMENT THAT IS RECOMMENDED BY THE PATIENT’S DOCTOR

      A. The doctor determines the treatment, not the insurance company.

      B. The importance of the doctor – patient relationship is established.

      IV. GIVE TAX RELIEF TO THOSE INDIVIDUALS AND FAMILIES THAT PURCHASE THEIR OWN HEALTH INSURANCE.

      A. A line item in the calculation of gross income;

      B. A deduction of fifty percent seems appropriate.

      V. TORT REFORM

      A. Limit the amount of the awards for malpractice;

      B. Eliminate the necessity for unnecessary tests.

      VI. RESPONSIBLE LEGISLATION

      A. Medicare is currently prevented from negotiating the price it will pay to the sellers of the drugs that are purchased for Medicare patients.

      B. Medicare and Medicaid are directed to negotiate with all of its vendors for the best price for all of the drugs and products that it buys.

      C. (I’m sure there are more that should be listed here.)

      VII. SAFEGUARDS

      A. Established enforcement and use E-Verify to ensure that illegal immigrants will not benefit from any government subsidized health insurance.

      B. Established enforcement and use E-Verify to ensure that illegal immigrants will not benefit from any type of health care.

      C. Use E-Verify for individuals applying for low income subsidies or those enrolling in Medicaid or Medicare.

      Two thousand more pages are required for the nationalization of health insurance.

      Reform Health Care, don’t nationalize it.

    28. Pingback: JCT Says Obama Health Plan is a $414 Billion Tax Hike | Fix Health Care Policy

    29. Pingback: JCT Says Obama Health Plan is a $414 Billion Tax Hike | Step Down Obama

    30. Tom, TX says:

      James from NC seems to be OK with everyone paying their fair share of the tax burden. OK then let us just have a flat tax on every dollar that everyone earns and the lower income levels can pay their fair share along with the middle class. We could have no exemptions and no minimum income level and in doing so all persons with any income level would pay taxes instead of no taxes and handouts for lower income folks while the mid to upper income levels pay all the taxes. That is a plan I am for 100 percent, along with putting able bodied welfare recipients to work for the checks they receive from the government each month. Let us ALL pay our fair share! We could balance the budget in no time and get a lot of work done with those welfare recipients working on the road repair crews and cleaning up our cities.

    31. Ron, Missouri says:

      Less than 2% of households in the USA have an income of over $250,000. Most people don't even know anyone in that bracket. If you are one, consider yourself one of the lucky ones.

    32. David CA says:

      Have we all forgotten our history. When our country was established the people had an interest in their future. Now all our youth cares about is the newest clothes, shoes, and who has more money. The fact is, that won't matter pretty soon. People MUST turn there damn televisions off and start thinking for themselves. If we don't who will? Future generations will deal with this oil spill and the effects it will have on fishing around the world. America will have to once again rely on another country for our food. This will lead to higher prices on food possibly even shortages. What happened to the people who actually wanted to decide their future. Now we've got every damn CEO, and federal banker Obama wants to put into power, in control. Why would you put a banker (keagan) into the supreme court. She is going to make any law she wants and she will have no objection on any issue. THE AMERICAN PEOPLE NEED TO COME TOGETHER AND TAKE THEIR GOVERNMENT BACK BEFORE IT IS TOO LATE AND WE HAVE MARTIAL LAW IMPLEMENTED. IT HAS HAPPENED BEFORE AND WILL BE EVEN WORSE BECAUSE IT WILL COME FROM FEMA!!!!

      DOWN WITH THE PRIVATE FEDERAL BANKS. UP WITH THE UNITED STATES PEOPLE.

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