Are you safe from taxes if you make less than $250,000?

I have read a lot on what's ahead for our taxes. Remember, President Obama pledged on many occasions not to raise taxes on people earning under $250,000. How is that working out? Unfortunately, not too well.


Just recently we saw a new reason to be skeptical of this promise.
Taxpayers earning less than $200,000 a year will pay roughly $3.9 billion more in taxes — in 2019 alone — due to healthcare reform, according to the Joint Committee on Taxation, Congress's official scorekeeper...Once the law is fully implemented in 2019, the JCT estimates the deduction limitation will affect 14.8 million taxpayers — 14.7 million of them will earn less than $200,000 a year. These taxpayers are single and joint filers, as well as heads of households.




The healthcare bill contains seven tax hikes that unquestionably violate Obama’s pledge. Here they are:



1. Individual Mandate Excise Tax: Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following (page 71 of manager’s amendment updates Reid bill):


Single 2 People 3+ People
2014 $495/0.5% AGI $990/0.5% AGI $1485/0.5%/AGI
2015 $495/1.0% AGI $990/1.0% AGI $1485/1.0%/AGI
2016+ $495/2.0% AGI $990/2.0% AGI $1485/2.0%/AGI

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS).

Don't you love the fact that there are exemptions? Do you fit in any of those categories? No? Then, get ready for more taxes. The CBO estimates that this Mandate Tax will raise $39 billion in penalties from 2010-2019.

2. Employer Mandate Tax: Small business owners pay their business taxes on their personal 1040 forms. This tax does not exempt startup small business owners even if they make less than $250,000. If the 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.


3. Medicine Cabinet Tax: Americans would no longer be able 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).

Once again, like all government programs, there are exceptions, making this unweildy and unfair.

4. HSA Withdrawal Tax Hike: 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.

5. Flexible Spending Account Cap – aka “Special Needs Kids Tax”: Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2011. 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 thousands of 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.

And I thought liberals had big hearts.

6. Medical Itemized Deductions Cap: Currently, those facing high medical expenses are allowed a deduction if the total cost of the expenses reduces the filer’s income by 7.5%. The new provision would impose a threshold of 10%. This new tax will most adversely affect early retirees and the catastrophically ill. Waived for 65+ taxpayers in 2013-2016 only.

This is a biggie. Read it again--if you have big medical bills, you can now look forward to paying additional taxes. Stay healthy!

7. Tax on Indoor Tanning Services: New 10% excise tax on Americans using indoor tanning salons.

OK, I'm not too worried about this one. But it just shows the depths to which the feds want to micromanage everything in our lives.


We can't memorize all of these points. But here's the main idea--NONE OF THE ABOVE PROVISIONS EXEMPTS FAMILIES MAKING LESS THAN $250,000


Working families will suffer, the economy will continue to stagnate, and our President will continue to say the exact opposite of what he is doing.