ObamaCare and Taxes: Promises Broken

Apr 13, 2010 | Economy, Healthcare, Taxes

By Joe Wolverton, II

A new Gallup poll reports that President Barack Obama’s approval rating has dropped below 50 percent for the first time since his inauguration. Respondents in that poll indicated that the healthcare law (the Patient Protection and Affordable Care Act) that the President signed on March 23 amid praise and proclamations is just too costly.

There’s no denying that anything costing nearly $1 trillion is “too costly.” Another more personal reason for Obama’s plummeting popular support may be the amnesia he’s suffered since getting the keys to the White House. During his campaign, then-Senator Obama repeatedly promised the American middle class that he would never raise taxes on families earning less than $250,000 and on individuals earning less than $200,000. The healthcare bill signed into law by President Obama contains at least seven tax increases on the segment of our population that he promised to protect. Don’t blame President Obama, though. This sort of short-term memory loss is a common symptom of those suffering from Potomac Fever.

Among the most notable taxes ObamaCare places on the backs of the working middle class is the individual mandate. Simply stated, under the provisions of the new law, if by 2014 every individual legally residing in America has not purchased a qualifying health insurance policy, then he is subject to a tax penalty. There is no wiggle room on that one. No matter your age, income, or how much you believed in his promises, President Obama’s healthcare “reform” forces you to purchase a commodity whether you like it or not.

Another less apparent aspect of the insidious tax increases that will undoubtedly devolve upon the middle class is the class of indirect taxes that the law imposes on the healthcare sector (the sixth largest industry in the American economy, mind you). These taxes, as with most other increases in overhead, will surely be passed on to consumers, thus representing a stealth tax increase.

Other new healthcare taxes are not so hidden, however. When adding up all the new taxes and penalties written into the new law, the bottom line reveals that most of that money will be paid by those individuals earning $200,000 and families earning $250,000. Just so no one feels left out, however, there are plenty of tax hikes especially targeted to every American, regardless of income.

The individual mandate that I referenced above requires that every person legally present in the United States (yes, that said “legally” present in the United States. Do I need to explain what that means for illegals? All the benefits and none of the penalties) must buy an approved healthcare insurance policy. Failure to comply will result in a penalty of 2.5 percent of the offender’s income or $695, depending on whether the person makes more or less than $30,000 a year.

Never fear, small business owner. President Obama is spreading the mandate love around, and you will get a heaping handful! According to Section 1513 of the Act (euphemistically entitled “Shared Responsibility for Employers”), any business (including small businesses with revenue less than $250,000 a year) must provide health insurance options to their employees or face fines and penalties. If the employer does not make a qualifying health insurance policy available to its employees, then they will be assessed a penalty (tax) of $750 per full-time employee. The tax is reduced slightly if employers do offer health insurance but make their employees cross a threshold probation period before it kicks in (30-60 day waiting period = $400/employee tax; 60+ day waiting period = $600/employee tax). Don’t delay, small business owners! It’s not just the money you earn that will be taxed under the President’s pet plan, however. Savings accounts are in the crosshairs, as well. Under the PPACA, pre-tax money from health savings accounts, flexible savings accounts, or health reimbursement accounts may not be used to buy over-the-counter medicine. All the money saved in this account will be taxed heavily if used to purchase any medicine other than that prescribed by a doctor or insulin.

Furthermore, any money withdrawn from any of these accounts for a non-medical purpose will be subject to a 20-percent tax. That’s up from 10 percent before the law goes into effect in 2011. Also, whereas now a person can deposit as much money as he deems necessary and prudent into a flexible spending account, beginning in 2011 a $2,500 cap is imposed. Proponents of this scheme claim that the “no over-the-counter tax” and the doubling of the non-medical withdrawal tax, combined, will generate about $15 billion in revenue. Well, I’m sure that’s another promise we can count on.

Even if such taxes and penalties did raise revenue, they are still unconstitutional. There is no authorization in Article 1, Section 8 of the Constitution for Congress to legislate in the healthcare arena.

Next, there is the so-called “Caucasian Tax.” Next time you visit the tanning salon, you’d better leave your wallet in the car. Under Section 10907 of the ObamaCare law, there is a new 10-percent excise tax on the use of indoor tanning booths. While this new tax might keep you from turning a golden brown, perhaps you’ll make do with the flaming red color you get from being so angry!

Finally, as the law stands today, a person may deduct any medical expense that exceeds 7.5 percent of his adjusted gross income. Beginning in 2013, however, that threshold rises to 10 percent of adjusted gross income, thereby eliminating the tax break for many Americans paying enormous medical bills. That is to say, fewer Americans who truly rely on medical care to the point of paying thousands of dollars a year will be able to offset those expenditures by claiming a deduction.

There are numerous other taxes, penalties, excises, and fees buried in the over 2,000 page law signed last month by President Obama. People earning over $200,000 and families earning over $250,000 are taxed even more heavily under the PPACA. Payroll taxes on those individuals, for example, increase from 1.45 percent to 2.35 percent under the law, and the tax on investment income over that amount increases to 3.8 percent. Of course, to President Obama such people are rich and can afford to shoulder the burden of redistribution. See, middle class? You don’t get all the fun!

So, you see, under ObamaCare, everyone will have to buy a health insurance policy or have it bought for him by his employer. Naturally, either way, one’s wages are reduced and his ability to save or spend is reduced proportionately. Moreover, the various savings disincentives contained in the bill don’t make saving the little money most have left over every month much of an attractive option anyway.

Remember, while it was worthwhile to examine the multitude of taxes and penalties promulgated under ObamaCare, it is more important to recognize that every one of the more than 2,000 pages of this law became law notwithstanding the lack of constitutional authority of Congress or the President to do so. As Americans, we recognize that any reduction in wages is effectively a tax as it is caused by a government mandate. We must assert our natural sovereignty and demand that the law be repealed or, even better, demand that our state legislatures pass laws nullifying its effect. This law is unconstitutional in several signal ways (see the previous article in this series) and the only valid response at this point is to compel our elected representatives to honor the oath they took to defend our Constitution against all enemies, foreign and domestic.

Other installments in this series: Obamacare: An Introduction Obamacare and the Commerce Clause, The States Respond to ObamaCare

To read the original article, visit http://www.thenewamerican.com/index.php/usnews/health-care/3295-obamacare-and-taxes-promises-broken

George Washington Advises Posterity

Mar 30, 2010 | Economy, Taxes

By Dr. Harold Pease

Sept. 19, 1796, just prior to leaving the presidency, President George Washington issued his famous Farewell Address. In his usual stately manner as the father of this great nation he warned posterity of possible pitfalls that could undermine or destroy this great experiment in liberty. His warnings may well be timelier nearly 220 years later as we near his birthday February 22.

Avoid Debt

In strong terms he asked that we avoid debt. He said: “As a very important source of strength and security cherish public credit… use it as sparingly as possible, avoiding occasion of expense… [Use the] time of peace, to discharge the debts which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear.” Today our national debt sits at over $12 1/3 trillion—the highest in our history. To put this in perspective, if we laid dollar bills on top of each other a trillion dollars would take us upward 68,000 miles into the sky—a third of the way to the moon. Twelve trillion dollars stacked on top of one another would take us to the moon and back twice. Obviously today neither party has taken Washington’s advice. Presently the debt per taxpayer is $113,151. We are spending our way into oblivion (See USDebtClock.org).

Preserve Religion and Morality

Washington pleaded with the nation to keep religion and morality strong. He said: “Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports…. Let it simply be asked, where is the security for property, for reputation, for life, if the sense of religious obligation desert the oaths which are the instruments of investigation in courts of justice? Reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle.” The founding Fathers never supported the notion of separation of religion and government—only the separation of an organization of religion from government. What would Washington say of the immorality that prevails today?

Foreign Policy

Our first president even had advice with respect to how we should deal with foreign nations. He advised that our commercial policy “should hold an equal and impartial hand; neither seeking nor granting exclusive favors or preferences…diffusing and diversifying by gentle means the streams of commerce but forcing nothing.” This is a far cry from the bullying tactics we’ve too often employed the last 100 years. But the warning about foreign aid was especially good. He basically told us gift giving in foreign affairs is a good way to be universally hated. He said it placed us “in the condition of having given equivalents for nominal favors, and yet of being reproached with ingratitude for not giving more.” Today there is hardly a nation in the world that does not have its hand out and when, after once giving, the amount is reduce or terminated we are hated all the more for it.

Special Interest Groups

He warned against the origin of “combinations and associations” whose intent was to suppress the desires of the majority in favor of the minority. He called them artificial power factions. We call them special interest groups. What would he say upon learning that a third of the cabinet of every president since Herbert Hoover belonged to the Council on Foreign Relations? Such factions, he said, “May answer popular ends and become potent engines by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government….” The antidote for this, Washington explained, was “to resist with care the spirit of innovation” upon basic constitutional principles or premises no matter how flowery, appealing or “specious the pretext.”

Hold Leaders Accountable

Washington worried about posterity not holding their elected officials strictly to the limits imposed by the Constitution. He knew many would seek to undermine that document by twisting it to give power they could not acquire without the distortion. Sound familiar? He said: “But let there be no change by usurpation; for though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed.” Today much of what the federal government does is not even mentioned in the Constitution. But freedom fighters are not likely to be popular, he said: “Real patriots, who may resist the intrigues of the favorite, are liable to become suspected and odious; while its tools and dupes usurp the applause and confidence of the people, to surrender their interests.” One need not look far for the tools and dupes; they seem to be everywhere. If we wish to return this nation to liberty and prosperity, we must adhere to the council of George Washington. We must choose leaders who strictly follow this formula, and we must continue to involve ourselves in holding these leaders accountable. After all, it’s about liberty.