Tax Lawyer's Blog

By way of Paul Caron here are 17 tax increases included in the Senate healthcare bill:

1. 40% excise tax on health coverage in excess of $8,500/$23,000 ($149.1 billion)
2. Employer W-2 reporting of value of health (negligible revenue effect)
3. Conform definition of medical expenses ($5.0 billion)
4. Increase penalty for nonqualified health savings account distributions to 20% ($1.3 billion)
5. Limit health flexible spending arrangements in cafeteria plans to $2,500 ($14.6 billion)
6. Require information reporting on payments to corporations ($17.1 billion)
7. Additional requirements for section 501(c)(3) hospitals (negligible revenue effects)
8. Impose annual fee on manufacturers & importers of branded drugs ($22.2 billion)
9. Impose annual fee on manufacturers & importers of medical devices ($19.3 billion)
10. Impose annual fee on health insurance providers ($60.4 billion)
11. Study and report of effect on veterans health care (no revenue effect)
12. Eliminate deduction for expenses allocable to Medicare Part D subsidy ($5.4 billion)
13. Raise 7.5% AGI floor on medical expenses deduction to 10% ($15.2 billion)
14. $500,000 deduction limitation on taxable year remuneration to health insurance officials ($0.6 billion)
15. Additional 0.5% hospital insurance tax on wages > $200,000 ($250,000 joint) ($53.8 billion)
16. Modification of section 833 treatment of certain health  organizations ($0.4 billion)
17. Impose 5% excise tax on cosmetic surgery ($5.8 billion)

Some quick observations about the items I highlighted above:

• Number 6 requires the filing of 1099′s for payments made to corporations. Of course, this has nothing whatsoever to do with healthcare reform, but is rather a mechanism to allow the IRS to identify underreportings of corporate income. But this provision will greatly increase the administrative burden on small businesses and do little to help the IRS track under-reportings of income because corporate recepients typically have income from so many sources that it will be impossible for the IRS to determine through it’s matching program whether or not $1,200 or $3,400 from company A or B was included in its gross receipts.
• Number 9 is a backdoor middle class tax hike. Manufacturers of medical devices will surely pass the increased costs to wholesalers who will in turn pass them on to consumers. We told you so.
• Number 13 makes it even rarer that a taxpayer will get a tax deduction for medical expenses. This is really just a tax increase on people who make less than $150,000 (the itemized deduction phase out threshold) because those who make more than this won’t get the full benefit of itemized deductions anyway.
• Number 14 puts a cap on the executive compensation that may be paid to health insurance company employees. The entire bill, of course, signals the beginning of a concerted effort by the left to destroy the insurance industry and replace it with a single payer system. The slippery slope is very slippery indeed.
• Number 17 is a vanity tax that will fall disproportionately on women. Why don’t we tax nostril hair tweezers and toupees while we’re at it? By the way, I am sure there is no truth to the rumor that Vice President Biden insisted on an exemption for back waxing.

Related Posts:

• Baucus Healthcare Bill Empowers IRS
• Backdoor Taxes: Obama Considering Consumption Tax
• IRS Powers Expanded in Healthcare Bills: Privacy Rights Issue?

Bookmark & Share: