Obamacare Imposes Massive Tax Hikes

Americans often forget that Obamacare has imposed one of the largest tax increases in decades, and it did so at a time when job-growth should be the nation’s number one priority.  The Congressional Budget Office (CBO) says the Obamacare tax hike over the next ten years will amount to more than $800 billion.[1]

• First, the Medicare payroll tax will increase by 0.9 percent for individuals with incomes above $200,000 ($250,000 for couples) in 2013.[2]  This tax will depress the demand for labor at a time when job creation is critical for jump-starting the economy.  Some may think that this Medicare payroll tax will not hit the middle class because of the relatively high initial income thresholds.  They are wrong.  The income thresholds were purposely held constant and not indexed to rise with inflation, so more and more middle income families will find themselves paying this tax that was supposedly reserved for the “rich.”
• Second, Obamacare includes a new 3.8 percent surtax on investment income for households with incomes above $200,000 for individuals and $250,000 for couples.[3]  Like the payroll tax hike, this tax would hit more and more middle class families in the future as the income thresholds are not indexed.  It will also push up the top rate on capital gains and dividends to very high levels (as high as 43 percent in 2013 if the Bush-era tax rates are allowed to expire).
• Third, Obamacare imposes a new 2.3 percent excise tax on medical devices.[4]  This tax will drive up the prices for innovation, including on breakthrough devices needed for chronic medical conditions, like diabetes.  The medical device industry employs 360,000 people in 6,000 plants across the country.[5]  The tax will depress employment in the industry and slow the pace of innovation.
• Fourth, the law imposes taxes on the branded drug and insurance industries, totaling $82 billion over ten years.[6]  These taxes will get passed on to consumers in the form of higher premiums for health insurance.
• Finally, there is the so-called “Cadillac” tax on insurance plans – imposed on health insurance with premiums above $27,500 for family coverage in 2018.[7]
• In 2019 and beyond, that threshold will grow with consumer prices, not medical inflation (which is always higher).[8]  Thus, after a few years, virtually all health-insurance plans will exceed the “high-cost” threshold and health insurance taxes will rise for everyone.