New Year Brings Dawn of Obamacare Tax Increases
Happy New Year! President Barack Obama's Twitter feed sent a message out moments before the new year rolled in:
President Obama's message was cheerier than the message from Franklin Delano Roosevelt to employers, which was posted all over American workplaces when FDR's Social Security Act went into effect on January 1, 1937:
Beginning January 1, 1937, your employer will be compelled by law to deduct a certain amount from your wages every payday. This is in compliance with the terms of the Social Security Act, signed by President Franklin Delano Roosevelt, August 14, 1935. The deduction begins with 1%, and increases until it reaches 3%. To the amount taken from your wages, your employer is required to pay, in addition, either an equal or double amount. The combined taxes may total 9% of the whole payroll. This is NOT a voluntary plan. Your employer MUST make this deduction.
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SOCIAL SECURITY BOARD
Seventy-seven years later, the Social Security tax rate is now 12.4 percent. In 2013, a little over six percent began to be withheld from both employer and employee. Like Social Security before it, Obamacare promises to increase Americans' taxes year by year, starting this month. Here are three of the major tax increases that come from the Democrats' healthcare law:
Individual Mandate Tax. The penalty for not buying health insurance will be either $95 or 1 percent of your annual income (whichever is greater). The Heritage Foundation points out that "Very few, if any, people will end up paying just $95, because individuals with an annual income of only $9,500 or less would likely qualify for Medicaid or a hardship exemption from the mandate." Additionally, the mandate will increase year by year to $325 or 2 percent of one's income in 2015, and $695 or 2.5 percent of income in 2016, whichever is greater.
Reinsurance Fee. Heritage notes that health insurers must pay the temporary fee on group health plans in order to spread the cost of the covering people within the individual market who are inside and outside the Obamacare’s exchanges. "The fee begins in 2014, costing $63 per covered person and decreasing in 2015 and 2016. Like most taxes and fees, the result will likely be higher insurance premiums," Heritage explains.
$60.1 Billion: Tax on Health Insurers (Takes effect 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
By 2015, the employer mandate kicks in. Originally, this mandate was scheduled to take effect in 2014, but the administration delayed it prior the the shoddy implementation of the healthcare law in late 2013. The mandate will order employers with 50 or more full-time employees (or those working 30 hours per week) to offer government-approved health insurance or pay a penalty. "The penalty varies—either $2,000 per employee after the first 30 workers, or $3,000 per employee receiving subsidized coverage in the exchange, whichever is less," Heritage says.