Tag Archives: government

On the Subject of Taxes….

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Here are the taxes that are starting to go into effect courtesy of Obamacare.  These are in addition to the tax increase that will result next year because President Obama refuses to allow the Bush tax cuts to be extended any longer, much less made permanent.  Note: Americans for Tax Reform refers to the Mandate fines as taxes.  This is how the Obama administration is trying to weasel-word the fines in front of the Supreme Court (and did so through the lower court cases).  However, the Patient Protection and Affordable Care Act clearly and directly makes these fines, not taxes. [Emphasis is in the original.]

Individual Mandate Excise Tax(Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following

1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016 + 2.5% AGI/$695 2.5% AGI/$1390 2.5% AGI/$2085

Employer Mandate Tax(Jan 2014):  If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees.  This provision applies to all employers with 50 or more employees. If any employee actually receives coverage through the [government’s insurance] exchange, the penalty on the employer for that employee rises to $3000.  If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).

Combined score of individual and employer mandate tax penalty: $65 billion/10 years

Surtax on Investment Income ($123 billion/Jan. 2013):  This increase involves the creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single).  This would result in the following top tax rates on investment income

Capital Gains Dividends Other*
2010-2012 15% 15% 35%
2013+ (current law) 23.8% 43.4% 43.4%
2013+ (Obama budget) 23.8%** 23.8% 43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens.

**eehines Note: The Obama budget was laughed out of the Senate by his own party.

Excise Tax on Comprehensive Health Insurance Plans($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family).  CPI +1 percentage point indexed.

Hike in Medicare Payroll Tax($86.8 bil/Jan 2013): Current law and changes:

First $200,000
($250,000 Married)
Employer/Employee		 All Remaining Wages
Employer/Employee
Current Law 1.45%/1.45%
2.9% self-employed		 1.45%/1.45%
2.9% self-employed
Obamacare Tax Hike 1.45%/1.45%
2.9% self-employed		 1.45%/2.35%
3.8% self-employed

Medicine Cabinet Tax($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin)

HSA Withdrawal Tax Hike($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap of $2500 (Indexed to inflation after 2013) on FSAs (now unlimited).  There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year.  Under tax rules, FSA dollars can be used to pay for this type of special needs education.

Tax on Medical Device Manufacturers($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exemptions include items retailing for less than $100.

Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI; it is waived for 65+ taxpayers in 2013-2016 only.

Tax on Indoor Tanning Services($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons

Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D($4.5 bil/Jan 2013)

Blue Cross/Blue Shield Tax Hike($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services

Excise Tax on Charitable Hospitals(Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS

Tax on Innovator Drug Companies($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Health Insurers($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. The stipulation phases in gradually until 2018, and is fully-imposed on firms with $50 million in profits.

$500,000 Annual Executive Compensation Limit for Health Insurance Executives($0.6 bil/Jan 2013)

Employer Reporting of Insurance on W-2(Min$/Jan 2011): Preamble to taxing health benefits on individual tax returns.

Corporate 1099-MISC Information Reporting($17.1 bil/Jan 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers

“Black liquor” tax hike(Tax hike of $23.6 billion).  This is a tax increase on a type of bio-fuel.

Codification of the “economic substance doctrine”(Tax hike of $4.5 billion).  This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.

That’s a total of $12 billion in taxes increases already inflicted in 2010 and 2011, $290 billion more in increased/newly created taxes starting next year, and yet another $60 billion starting in 2014.  Plus the rapidly accelerating system of fines for not buying or providing health insurance, which total $65 billion over 10 years; and another $32 billion in taxes, starting in 2018, for buying more health insurance than Government has determined you need—those Cadillac plans.

A Ruling on the 2nd Amendment

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US District Judge Benson Everett Legg (Maryland District), in a Monday ruling has said that Maryland residents are not required, as a Marayland had had it, to convince authorities that they have a “good and substantial reason” to own a handgun.

Judge Legg wrote, among other things,

…the Court finds that the right to bear arms is not limited to the home. The signposts left by recent Supreme Court and Fourth Circuit case law all point to the conclusion that Woollard‘s ―claim to self-defense—asserted by him as a law-abiding citizen…—does implicate the Second Amendment, albeit subject to lawful limitations.

He went on [emphasis mine]:

A law that burdens the exercise of an enumerated constitutional right by simply making that right more difficult to exercise cannot be considered “reasonably adapted” to a government interest, no matter how substantial that interest may be.  Maryland‘s goal of “minimizing the proliferation of handguns among those who do not have a demonstrated need for them,”…is not a permissible method of preventing crime or ensuring public safety; it burdens the right too broadly.  Those who drafted and ratified the Second Amendment surely knew that the right they were enshrining carried a risk of misuse, and states have considerable latitude to channel the exercise of the right in ways that will minimize that risk.  States may not, however, seek to reduce the danger by means of widespread curtailment of the right itself.  “[E]ven the most legitimate goal may not be advanced in a constitutionally impermissible manner.”

At bottom, this case rests on a simple proposition: If the Government wishes to burden a right guaranteed by the Constitution, it may do so provided that it can show a satisfactory justification and a sufficiently adapted method.  The showing, however, is always the Government‘s to make.  A citizen may not be required to offer a “good and substantial reason” why he should be permitted to exercise his rights.  The right‘s existence is all the reason he needs.

Maryland’s Assistant Attorney General, Matthew Fader, says he’ll appeal, saying “we” disagree, and taking note of the “very important implications of the ruling for public safety.”  He’s wrong, though, on two counts: in the first place, the public safety is maximized by hewing to the Constitution, not by deviating from it.  In the second place, he apparently wasn’t paying attention to the Legg’s ruling:

States may not, however, seek to reduce the danger [of misuse] by means of widespread curtailment of the right itself.

Judge Legg has the right of it.

Our Feckless Foreign Policy

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The Progressive line on American foreign policy was first brought to light by Presidential candidate John Kerry in 2004 when he insisted, with a straight face, that America’s military policy must pass a “global test” before it can be implemented.  That’s a policy that’s alive and well in the present administration, as this exchange during last week’s Senate Armed Services Committee hearing between Senator Jeff Sessions (R, AL) and Secretary of Defense, Leon Panetta, demonstrates (the exchange begins at about the 2:00 minute mark) [emphasis mine].

SESSIONS: Do you think you can act without Congress and initiate a no-fly zone in Syria without congressional approval?

PANETTA: …our goal would be to seek international permission, and we would come to the Congress and inform you and determine how best to approach this; whether or not we would want to get permission from the Congress, I think those are issues we would have to discuss as we decide what to do here.

SESSIONS: Well I am almost breathless about that because what I heard you say is, “we’re going to seek international approval and we will come and tell the Congress what we might do, and we might seek congressional approval” … Would you like to clarify that?

PANETTA: I have also served with Republican Presidents and Democratic Presidents who have always reserved the right to defend this country if necessary.

SESSIONS: But before you would do this, you would seek permission of the international authorities?

PANETTA: If we are working with an international coalition or NATO we would want to be able to get appropriate permissions in order to be able to do that.  All of these countries would want to have some kind of legal basis on which to act.

SESSIONS: What “legal basis” are you looking for?  What entity?

PANETTA: If NATO made the decision to go in, that would be one.  If we developed an international coalition beyond NATO then obviously some kind of UN security resolution would be the basis for that.

SESSIONS: So you are saying NATO would give you a “legal basis?”  And an ad hoc coalition of nations would provide a “legal basis?”

PANETTA: We would seek whatever legal basis we would need in order to make that justified. We can’t just pull them all together without getting the legal basis on which to act.

…

SESSIONS: I’m all for having international support, but I’m really baffled by the idea that somehow an international assembly provides a legal basis for the United States military to be deployed in combat.  I don’t think it’s close to being correct.  They provide no legal authority.  The only legal authority that’s required to deploy the U.S. military is the Congress and the president and the law in the Constitution.

PANETTA:  Let me, just for the record, be clear again.  When it comes to the national defense of this country, the President of the United States has the authority under the Constitution to act to defend this country, and we will.  If it comes to an operation where we’re trying to build a coalition of nations to work together to go in and operate as we did in Libya, or Bosnia, or for that matter, Afghanistan, we want to do it with permissions either by NATO or by the international community.

So, what do we have, then?  Panetta has gone even farther than Kerry, now insisting that “international permission,” rather than the Constitution (which includes authorization by Congress), is the “legal basis” for American use of our military capability in an international effort.  The administration seems to accept foreign control, foreign permissions, over whether we will use our military to conduct national defense activities in conjunction with foreign groups of countries; we have no authority of our own to employ our forces in that environment.  The President, intimates Panetta, executes his national defense obligations absent Congress’ involvement, although there is a willingness to discuss “whether or not we would want to get [Congressional] permission.”  Notice, also, that, even after Panetta’s “clarification,” neither the Constitution nor the Congress enter into it.  Ever.

It seems as though, given the entirety of Panetta’s responses, that he didn’t even understand the questions.

As Sessions said, international support is good.  But a sovereign nation needs no one else’s permission to use its military forces, either unilaterally or in concert with other nations.  Period.  That’s not the same as having an agreement with those others to engage in a joint action of some sort.  Those agreements, though, only outline the various responsibilities of the members of the coalition (ideally founded on the individual capabilities of those members); they do not constitute permission for employment.

At least General Martin Dempsey (those first two minutes of the video) understands for whom he works.

h/t Power Line

Qualified Opinions

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Do we allow those around here?  Even Massachusetts may be coming around.  Governor Duvall Patrick (D, MA) is looking at his state’s business regulations with a view to reducing their footprint on…business.  The Wall Street Journal is reporting that, among other things, he’s going to insist on what amounts to a business impact statement before a new regulation can go into effect.  The regulator proposing a new rule would be required to answer such questions as

Is this likely to encourage or deter the formation of business?

which is standard pap, but then Duvall cuts to the chase with a follow-up:

Who did you consult from the small business community to come to this conclusion?

Hmm….

The governor’s look includes rescission/tweaking of such regulations as a requirement that a hair salon owner selling her shop to an employee must first close down while the state processes associated paperwork, and a requirement that funeral directors must hire full-time apprentices only; part-timers are barred.  He’s also looking at an additional roughly 800 regulations across 60 state agencies.

Time will tell whether this is a serious look, or primarily politically useful tweaks, but it’s a promising start.

There is reason for skepticism.  Last year, President Obama made a big deal about the regulatory review process he was initiating.  That, though, has turned out to be a sham, consisting of minor changes to minor regulations without addressing his overall regulatory environment, which has been entirely anti-business.

Progressive Energy Subsidies

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John Hinderaker has a couple of slides from a Power Line post of his from the middle of last month that are instructive.  The first indicates the relative overt subsidy payments for a range of electric energy producer types.

In case you’re having trouble reading it, the salient parts are these: the figure shows Federal electric subsidies in dollars per MW-hr produced (2007 dollars).  The values on the left are for Natural Gas and Petroleum and for Coal at $0.25 and $0.44, respectively.  The values on the right are for Wind and for Solar at $23.37 and $24.34, respectively.  Those evil oil, natural gas, and coal companies get less than 2% of the subsidy Precious wind and solar companies get.

Pop quiz: which are the market-competitive companies?

There’s also this slide, which shows oil production rates over the last several years.  Recall its backdrop: President Obama’s claim that, on his watch, oil and gas production are up sharply.

The blue line indicates oil production on Federal land, and the Red line indicates production on private and State land.  The key interval is from 2007 on, when the Progressives had control of the Congress, followed shortly by Progressive control of the Executive Branch.  Notice that while production from private and State land was rising, production from Federal land was being driven down.  This, coupled with Obama’s slow-walking of Gulf deep water drilling permits; his refusal to allow new drilling, much less production beyond existing wells, into/from known oil deposits on Federal land; his EPA’s CO2 regulation over even a Progressive Congress’ objection; his killing of the Keystone XL pipeline; and so on, represent a far more powerful, and far more insidious, subsidy of his Precious “green” energy producers: active suppression of competition from production of cheap hydrocarbon-based energy from nearby sources.

Some subsidies are more equal than others.