Obamacare Will Cost Taxpayers $1 Trillion Over Next Ten Years

Obamacare Will Cost Taxpayers $1 Trillion Over Next Ten Years

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President Obama continues to tell the American people that he is a tax cutter not a tax raiser. Fortunately for us, William McBride of the Tax Foundation has the truth.

This week the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) updated their estimates of the tax increases embedded in Obamacare, i.e. the Patient Protection and Affordable Care Act.  Turns out it’s not so affordable.  Over ten years Obamacare represents over a $1 trillion in new taxes.  The chart below, reproduced from the House Committee on Ways and Means, outlines the more than 20 new taxes comprised in the law.

This estimate has increased dramatically since the law was passed in 2010 because now more of the taxes fall within the 10 year budget window.  For instance, the “Cadillac tax” doesn’t go into effect until 2018, meaning even the current estimate understates the fully phased-in tax increases.

Provision

March 2010 Estimate, 2010-2019, $US billion

June/July 2012 Re-Estimate, 2013-2022, $US billion

Additional 0.9 percent payroll tax on wages and self-employment income and new 3.8 percent tax on dividends, capital gains, and other investment income for taxpayers earning over $200,000 (singles) / $250,000 (married)

210.2

317.7

“Cadillac tax” on high-cost plans *

32

111

Employer mandate *

52

106

Annual tax on health insurance providers *

60.1

101.7

Individual mandate *

17

55

Annual tax on drug manufacturers/importers *

27

34.2

2.3 percent excise tax on medical device manufacturers/importers*

20

29.1

Limit FSAs in cafeteria plans *

13

24

Raise 7.5 percent AGI floor on medical expense deduction to 10 percent *

15.2

18.7

Deny eligibility of “black liquor” for cellulosic biofuel producer credit

23.6

15.5

Codify economic substance doctrine

4.5

5.3

Increase penalty for nonqualified HSA distributions *

1.4

4.5

Impose limitations on the use of HSAs, FSAs, HRAs, and Archer MSAs to purchase over-the-counter medicines *

5.0

4

Impose fee on insured and self-insured health plans; patient-centered outcomes research trust fund *

2.6

3.8

Eliminate deduction for expenses allocable to Medicare Part D subsidy

4.5

3.1

Impose 10 percent tax on tanning services *

2.7

1.5

Limit deduction for compensation to officers, employees, directors, and service providers of certain health insurance providers

0.6

0.8

Modify section 833 treatment of certain health organizations

0.4

0.4

Other Revenue Effects

60.3

222**

Additional requirements for section 501(c)(3) hospitals

Negligible

Negligible

Employer W-2 reporting of value of health benefits

Negligible

Negligible

Total Gross Tax Increase:

569.2

1,058.3

* Provision targets households earning less than $250,000.** Includes CBO’s $216.0 billion estimate for “Associated Effects of Coverage Provisions on Tax Revenues” and $6.0 billion within CBO’s “Other Revenue Provisions” category that is not otherwise accounted for in the CBO or JCT estimates.

Source: Joint Committee on Taxation Estimates, prepared by Ways and Means Committee Staff

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida

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Comments

  1. Rakan Alhuthali says:

    I really think the US needs a better health system that is why I like the obamacare. I think everyone should be able to go to the hospital when he or she gets sick. However, I am surprised by the numbers in the article. I did not know that the obamacare will cost the taxpayer this much money. I think the government should solve the problem of the health system but without increasing taxes.