Wednesday, July 11, 2012

More Republican Disinformation On Obamacare?

The latest Republican talking point on Obamacare since the Supreme Court decision upholding the individual mandate has begun to emerge.

The latest use of it to come to my attention was this morning on the MSNBC program The Daily Rundown with Chuck Todd. On the program Senator John Cornyn (R – Texas) spoke of the 22 other taxes in Obamacare in addition to the individual mandate.

Now, frankly, I didn’t know of these 22 other taxes. I knew there were a couple, very few that affected any significant number of people. The experience here in Massachusetts has already shown that the tax penalty for lack of insurance will affect only one percent of the population.

So, I attempted to research this assertion.

All I could find was an article published yesterday in Forbes (hardly a publication favorable to the Administration). In addition to the mandate they listed only six. Among these was the tax on employers with 50 or more employees who don’t provide insurance (they didn’t mention the associated tax credit for providing insurance).

You can examine these for yourself, but you’ll see that they are not nearly the onerous and far-reaching burden that the ominous warning of 22 additional taxes that this talking point has been promoting.

Anyone who can provide an enumeration of the remaining 16 taxes with supporting documentation is welcome. Otherwise I believe that this is another effort at disinformation that should be relegated to the circular file containing claims of voter fraud and charges that the President was born in Kenya  or other claims about Obamacare such as it would cost 800,000 jobs or cut Medicare by $500 billion.

UPDATE: I’ve found a list of 20. See comment section below.


  1. According to The Washington Post fact check “Total middle-class tax hikes, as the Joint Committee on Taxation has listed them, would amount to just $64.6 billion, compared to $343 billion in subsidies and credits. The tax increases in this case would affect individuals making less than $200,000. They include the penalty, plus a higher threshold for itemized deductions of medical expenses and additional taxes related to health spending accounts and flexible spending arrangements.”

  2. In fairness, I did find a list. As you will see, half have not yet been imposed and may never be.
    Others are penalties for non-compliance. Finally a good number relate to pharmaceutical and health care companies which they agreed to in advance for their support of the bill.

    As the above Washington Post story shows, the impact of these "taxes" are offset by more than 4 to 1 through subsidies and credits.

    List of ACA taxes: (PART I)
    Taxes that took effect in 2010:
    1. Excise Tax on Charitable Hospitals (Min$/immediate): $50,000 per hospital if they fail to meet new "community health assessment needs," "financial assistance," and "billing and collection" rules set by HHS. Bill: PPACA; Page: 1,961-1,971
    2. Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113
    3. “Black liquor” tax hike (Tax hike of $23.6 billion). This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105
    4. Tax on Innovator Drug Companies ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980
    5. Blue Cross/Blue Shield Tax Hike ($0.4 bil/Jan 2010): 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. Bill: PPACA; Page: 2,004
    6. Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399
    Taxes that took effect in 2011:
    7. Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer 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). Bill: PPACA; Page: 1,957-1,959
    8. HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959
    Tax that took effect in 2012:
    9. Employer Reporting of Insurance on W-2 (Min$/Jan 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957
    Taxes that take effect in 2013:
    10. Surtax on Investment Income ($123 billion/Jan. 2013): Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). Bill: Reconciliation Act; Page: 87-93

  3. ACA Taxes (Part II)

    11. Hike in Medicare Payroll Tax.
    Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93
    12. Tax on Medical Device Manufacturers ($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986
    13. High Medical Bills Tax ($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995
    14. Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. 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. Bill: PPACA; Page: 2,388-2,389
    15. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D ($4.5 bil/Jan 2013) Bill: PPACA; Page: 1,994
    16. $500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 bil/Jan 2013). Bill: PPACA; Page: 1,995-2,000
    Taxes that take effect in 2014:
    17. Individual Mandate Excise Tax (Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax.
    Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337
    18. Employer Mandate Tax (Jan 2014): 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 $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. 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). Bill: PPACA; Page: 345-346
    Combined score of individual and employer mandate tax penalty: $65 billion/10 years
    19. Tax on Health Insurers ($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993
    Taxes that take effect in 2018:
    20. Excise Tax on Comprehensive Health Insurance Plans ($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956

    1. I would emphasize that the analysis above comes from an
      anti-ACA source and thus the analytical comments are subject to skepticism as opposed to the data used by the Washington Post which come from the Joint Committee on Taxation.

      On balance, I would maintain my original view that the shorthand talking point used by Cornyn and other Republicans is misleading and deceptive

  4. Good. The Federal Tresury needs the income, since Richie Rich won't cough it up.

  5. Given #6 I can see why Speaker Boehner hates this bill!

    1. You could be right ...It has been reported that Speaker Boehner enjoys spending mini-vacations at his house in West Chester, Ohio, where he relaxes by cutting his lawn with a Toro push mower.

      Source: The Wall Street Journal - Article written by: By Karl Rove August 25, 2011

  6. Frankly, any government that has the audacity to insure old people from getting old, and dying people from dying, via a self serving, profit driven health care complex, is just doomed to get milked dry. I doubt the Fed will be able to print money fast enough to keep up with the corruption, opportunism, and just bad management that will inevitably follow any government attempt to control this issue.

    I remember when Hillary Clinton tried it, during Bill's first term, and in a moment of clarity she admitted that the problem is people are unwilling to accept their demise, and that dumping money on it would not change mortality.

    The government is an institution that gets put in power by the popular vote. This whole effort from Obama was nothing but a political ploy to gain those needed votes.

    Look out world, here comes a new government cash cow!!

    1. This is not a government program - that would be a single payer system. This is a private insurer program that was originally proposed by the American Enterprise Institute.

  7. According to people who have actually read the bill there are 25 new taxes, 17 which will impact the middle class directly.

    1. What are they? I gave the only list I could find and as is plainly evident very few affect the middle class, and then only marginally. As shown in the Post article the costs are dramatically outweighed by credits and subsidies.
      I can't be expected to respond to non-specific allegations made by unnamed people.


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