Subscribe to Money Morning get daily headlines subscribe now! Money Morning Private Briefing today's private briefing Access Your Profit Alerts

The Real Impact of Obamacare Taxes

The Affordable Care Act is going to cost everyone thanks to a slew of Obamacare taxes.

The Affordable Care Act is primarily aimed at decreasing the number of uninsured Americans and reducing the overall costs of health care. Those who think the law won't change much about their healthcare or finances don't realize they'll likely be paying for it.

That's why Republicans are focused on striking down Obamacare should they nab a presidential victory in Election 2012. They claim that the taxes involved to pay for Obamacare will crush the middle class and most U.S. taxpayers, as well as trigger job losses in affected industries.

Republicans also harp on the fact that President Obama said he would not raise taxes.

"This bill was built with smoke and mirrors to hide the impact of the trillions of dollars of new entitlement spending," House Budget Committee Chairman Paul Ryan, R-WI, said in a statement last Tuesday.

Here's a glimpse at what those Obamacare taxes will do to the country.

Obamacare Taxes: Who Pays

According to the Congressional Budget Office, 76% of those who stand to be slapped with the penalty (the Supreme Court calls it a tax) for not carrying insurance are those earning less than $120,000. The penalty for the average American family is $4,700 a year in new taxes.

The CBO reported that the federal government would save roughly $84 billion due to the Medicaid change which allows states to opt out of the law's Medicaid expansion. But, low-income residents in states that choose not to participate might find it more difficult to afford insurance.

Other new Obamacare taxes will hit drug companies (totaling $27 billion), and medical device makers ($20 billion), as well as enforce new reporting requirements and regulations on physicians.

The stipulations will make access to health care and services more costly and difficult for seniors. About six million people nationwide will most likely lose their Medicaid eligibility because their states will not join the Medicaid expansion. Roughly half would be able to obtain private insurance, leaving the other half without coverage, the CBO reports.

Starting in 2013, people making more than $200,000 will have to shell out an additional 0.9% tax for the Medicare Part A payroll tax, on top if the 1.45% they already pay.

"CBO exposed the president's partisan health law for what it is: a massive expansion of government paid for with over a trillion dollars in tax increases, while increasing costs on the backs of middle-class families, job creators and states during the worst economic downturn in a generation," Sen. Orrin Hatch (R-Utah) said in a statement

Job and Wage Losses Thanks to Obamacare

You can also expect job losses under Obamacare, Republicans warn.

All employers will be subject to a new mandate to provide health insurance for their employees. Employers with more than 50 employees that do not offer coverage, and have at least one full-time employee, who received a premium tax credit, will pay a fine of $2,000 per employee (excluding the first 30) or $3,000 per employee receiving the premium tax subsidy.

These tax hikes will slow growth in the already ailing U.S. economy, increase the unhealthy unemployment level and suppress wages as workers will be forced to take more of their compensation in the form of health insurance.

Those lost wages, for a large part picked out of the pockets of low and middle income families, reduce income in much the same way an income tax hike would.

Obamacare taxes will also slam the medical device industry. At the GOP-led House Taxes Committee hearing last Monday, Rep. Erik Paulsen, R-MN, defended his efforts to repeal a 2.3% excise tax set to hit the medical device industry under Obamacare.

The pending tax, Paulsen says, is already leading to layoffs as companies prepare for its Jan. 1 effective date. Paulsen maintains the tax could eliminate up to 10% of the jobs in an industry that employs 35,000 in his home state and some 400,000 nationally.

"The tax is really kind of a ticking time bomb," Paulsen cautioned.

The uncertainty surrounding Obamacare taxes and their repercussions has led employers and businesses to halt additional hiring and expanding. That's hardly encouraging news when July's U.S. jobs report just reported the country's unemployment rate ticked up to 8.3%.

Related Articles and News:

Join the conversation. Click here to jump to comments…

Leave a Reply

Your email address will not be published. Required fields are marked *

Some HTML is OK