The Tax Lawyer's Blog

President Obama continues to tell the American people that he is a tax cutter not a tax raiser. Fortunately for us, William McBride of the Tax Foundation has the truth.

This week the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) updated their estimates of the tax increases embedded in Obamacare, i.e. the Patient Protection and Affordable Care Act.  Turns out it’s not so affordable.  Over ten years Obamacare represents over a $1 trillion in new taxes.  The chart below, reproduced from the House Committee on Ways and Means, outlines the more than 20 new taxes comprised in the law.

This estimate has increased dramatically since the law was passed in 2010 because now more of the taxes fall within the 10 year budget window.  For instance, the “Cadillac tax” doesn’t go into effect until 2018, meaning even the current estimate understates the fully phased-in tax increases.

Provision	March 2010 Estimate, 2010-2019, $US billion	June/July 2012 Re-Estimate, 2013-2022, $US billion
Additional 0.9 percent payroll tax on wages and self-employment income and new 3.8 percent tax on dividends, capital gains, and other investment income for taxpayers earning over $200,000 (singles) / $250,000 (married)	210.2	317.7
“Cadillac tax” on high-cost plans *	32	111
Employer mandate *	52	106
Annual tax on health insurance providers *	60.1	101.7
Individual mandate *	17	55
Annual tax on drug manufacturers/importers *	27	34.2
2.3 percent excise tax on medical device manufacturers/importers*	20	29.1
Limit FSAs in cafeteria plans *	13	24
Raise 7.5 percent AGI floor on medical expense deduction to 10 percent *	15.2	18.7
Deny eligibility of “black liquor” for cellulosic biofuel producer credit	23.6	15.5
Codify economic substance doctrine	4.5	5.3
Increase penalty for nonqualified HSA distributions *	1.4	4.5
Impose limitations on the use of HSAs, FSAs, HRAs, and Archer MSAs to purchase over-the-counter medicines *	5.0	4
Impose fee on insured and self-insured health plans; patient-centered outcomes research trust fund *	2.6	3.8
Eliminate deduction for expenses allocable to Medicare Part D subsidy	4.5	3.1
Impose 10 percent tax on tanning services *	2.7	1.5
Limit deduction for compensation to officers, employees, directors, and service providers of certain health insurance providers	0.6	0.8
Modify section 833 treatment of certain health organizations	0.4	0.4
Other Revenue Effects	60.3	222**
Additional requirements for section 501(c)(3) hospitals	Negligible	Negligible
Employer W-2 reporting of value of health benefits	Negligible	Negligible
Total Gross Tax Increase:	569.2	1,058.3
* Provision targets households earning less than $250,000.** Includes CBO’s $216.0 billion estimate for “Associated Effects of Coverage Provisions on Tax Revenues” and $6.0 billion within CBO’s “Other Revenue Provisions” category that is not otherwise accounted for in the CBO or JCT estimates.
Source: Joint Committee on Taxation Estimates, prepared by Ways and Means Committee Staff

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