There are only two ways to pay for Obama’s Health Care Reform: reduce benefits and (or) increase taxes. Reducing benefits is hard. Look what happened when government bureaucrats tried to ration mammograms for women under 50. People stood up in revolt. Everybody knows what breast cancer is.
It is much easier for the government to tax. The reason is: most Americans do not do their own taxes. Even those who do it themselves don’t understand it. The shining example is the Treasury Secretary Timothy Geitner, who didn’t understand the Turbo Tax instructions. We just feed the info from our W2 forms and from our receipts into a computer program and let the thing do the thinking for us.
In this post I’ll try to explain to you the taxes that are coming at us with the Obama’s Health Care Reform – so you can spot them and recognize them for what they are.
Let’s start with: What is “Tax” for Dummies: Money that comes out of your pocket and goes to IRS account is a tax. The Obama administration prefers to call them “revenue enhancements”. May be because it sounds kind of French they think that “revenue enhancement” term will divert attention from what they are doing.
Just remember the rule for recognizing tax: from your pocket to IRS account.
Now let us look at proposed taxes in the Heath Care Bill in “around the kitchen table” terms.
1. They call it “Employer Sponsored Insurance Tax Exclusion”. Here is the point where you give up and pay Tax-Services to do your taxes. Let me try to explain.
At the moment money that are taken from your paycheck for health insurance are tax-free. The money you pay for health insurance is often not even included in your W2 form taxable income. If the government taxes those health insurance payments you may not even notice. Your taxable income on your W2 form will look bigger and you may think you made more money, when in fact that money were never in your pocket – they went to the health insurance companies and you will be stuck with paying taxes on them.
Who came up with the idea of such tax? No, not Obama. John McCain proposed it during the ’08 campaign. People hated it and McCain lost the election. Now Obama’s people are trying to sneak it into the bill as “republican’s approved”. Really?
2. “Sin Taxes”. Extra taxes on cigarettes, alcohol and sugary drinks. People understand this one. One of the first tax increases Obama imposed was the cigarette tax that was supposed to pay for children health care. This one is working just fine for the President as the number of smokers in America is increasing for the first time in a decade. May be Obama administration thought that all smokers in America make more than 250 K a year and taxed them, because the Candidate Obama promised no taxes for the people making less than 250K a year.
3. “Changes to the Payroll tax”. You have no clue what it is, but you think – this must be good, after all we voted for Change. Are you sure? Such a change will mean to you increase of the amount you already pay for Medicare. But instead of fixing fraud in Medicare, Democrats are wondering if you are willing to pay more taxes first. In the 2000+ pages of the health care bill there is nothing that makes it clear how the Government will get rid of the fraud and mismanagement in Medicare. A future commission will tell you details about it later.
4. “Coverage mandate”. This one is my favorite. We gave the Democrats Mandate and they give it back to us. There is a special social feeling when Government makes something mandatory – don’t you feel that we belong together? Obama’s health care bill will penalize everybody who has no insurance and is over 150% poverty line. Bunch of healthy young people fit in this category. Their only HOPE to escape the penalty tax may be the US Supreme Court if somebody dares to challenge this tax as unconstitutional. President Obama said this is not a tax – this is a penalty. This penalty comes out of your pocket and is collected with your tax-return form – goes to the IRS account. I call it a tax. It is up to you to decide.
Democrats say that those who lack insurance cost the rest of us and it is time for them to pick up their own tab. Well, those who are able but out of work cost us money too. Is the Government going to make “having a job” mandatory? They may fix unemployment the same way they intend to fix the health insurance. Just make it mandatory. Obama may also make peace mandatory so he can actually earn his Nobel Peace Prize.
5. Eliminating Health Care Tax Benefits means less chance to deduct health care costs from your taxable income.
6. Value Added Tax means taxing every bolt and nut on those wheel chairs and scooters and walkers, oxygen tanks, everything that assist the life of the people. Yes, tax the sick people.
You can see through the taxes. It takes a little effort, but it is not impossible. Or you can just ignore it all, because you may as well discover next what the Earned Income Credit means. That will really blow your mind.