Monday Open Thread [12.10.12]
When we talk about taxation, it is important to note that more taxes will be rising in 2013 due to the implementation of Obamacare, and they cover some taxes we often discuss, like the capital gains rate.
President Obama’s 2010 health reform law, however, is certain to change the tax code in 2013. Starting next year, five new tax increases will begin to raise $258.2 billion in new revenue over seven years.
[1] The top tax rates on capital gains and dividends will jump from 15% to 18.8%.
The 3.8% surtax on unearned income (income earned through interest, rents, dividends, annuities, royalties, etc.) will only fall on the wealthiest two percent: households making at least $250,000, or individuals making more than $200,000. The 3.8% surtax is a big adjustment, but the current 15% tax rate is the lowest it’s been since World War II. If Congress allows the 2003 Bush tax rates to expire, the top rate on capital gains will rise to 23.8%, and the top rate on dividends will leap to 43.4%
[2] A new tax will charge the wealthy to help pay for Medicare’s hospital insurance. There will be an additional 0.9% tax on earned income in excess of $250,000 for families and $200,000 for individuals to help pay for Medicare Part A, which covers hospital stays, nursing facilities, and hospice care. In addition to the 3.8% surtax, the hospital insurance tax will raise $20.5 billion in new revenue next year, and $210 billion over the next seven.
[3] Manufactures and importers of certain medical devices will be taxed 2.3% of the price of the product. Devices will not include retail objects like corrective lenses or hearing aids, but will include products like defibrillators, pacemakers, artificial joints, stents, and those involved in cancer treatments, angioplasty and vascular surgery. More than 800 companies from the powerful medical device industry have protested the tax, which will raise $1.8 billion next year, and $20 billion over the next seven years.
[4] Under current law, Americans get a tax deduction if all their medical expenses exceed 7.5% of what they make (minus exceptions and deductions). That number will rise to 10% for almost everyone in 2013. Those that are 65 and older get a pass for 3 years. This tax raises $400 million next year, $15.2 billion over seven years. […]
[5] 33 million workers choose to participate in a Flexible Spending Accounts (FSA), which count certain healthcare expenses not covered by insurance as tax deductible. Employers set the limit at how much employees can take out of their salaries, and most companies set the FSA limit around $5,000. So if you knew your child was going to need $5,000 worth of braces next year, you could put that much money in a FSA, saving on federal income, Social Security, Medicare, and in some states, state income taxes, while the employer saves on Social Security and Medicare taxes. Under the Affordable Care Act, the government will set a first-ever FSA limit at $2,500. The average employee contribution today is $1,496, so most people that do use FSAs won’t be affected. This tax is expected to raise $1.5 billion next year, $13 billion over the next seven years.
And the following is real:
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My favorite part: “Departure from ……………..MOON…………….”
Obama (maybe): “A half a loaf is better than a whole loaf, as long as it’s bipartisan.”
Somebody is floating the idea of a compromise on tax increases less than what expiration would yield, and benefit cuts that we don’t have to agree to at all.
There’s no benefit for Democrats to compromise at this point. It’s a trial balloon that needs to be shot down.
Where’s the Tea Party when you need them?
Must read post from Baseline Scenario of the day: Entitlement Scare Tactics
Question for DelDem: There are two kinds of FSA’s that many employers offer–the one for healthcare expenses and the one for child care expenses.
Is the one for child care expenses also capped now?
How stupid is this? Dry Cleaner puts a “pro-life” message on their hangers. Hangers, people.
Actually, cassandra, I see it as brilliant marketing. Some entrepreneur sold dry cleaners on the idea that people want to see political messages in their closet every morning while they are picking out their clothes.
And got paid for it.
That customs form must be worth a fortune. I wish I owned it so I could give it to my son. It would be his coolest gift ever.
yeegads, you had to be a self-pay kidney transplant practically to qualify for the 7.5% health deduction prior. Increasing to 10%, may call upon a lung too. I’d suspect that 2.5% rise in criteria is going to deliver a whole bunch more revenue from citizenry to treasury.
I’ll never understand the surtax placed on “medical devices” at all. Nothing like kicking it to a guy with chest pain when he’s down.
Now about racehorses…..