OBAMA'S HEALTH PLAN -- TAXES, TAXES EVERYWHERE
February 25, 2010
The White House recently released President Obama's health care reform proposal. The plan incorporates a mixture of the many tax increases passed by the House and Senate, hiking taxes by almost $750 billion over ten years. This is on top of $1.3 trillion in other tax increases the President recently proposed in his 2011 budget. Not that there is ever a good time to raise taxes, but doing so as the economy is still emerging from a deep recession is particularly ill-advised and will likely prolong full recovery. Moreover, the President's proposal deviates from his stated goal to address the soaring spending and debt problem the nation faces by piling on massive new spending and taxes, says the Heritage Foundation.
How will the president's plan affect payroll taxes?
- President Obama accepted the Senate's plan to break long-held policy by raising the Hospital Insurance (HI) portion of the payroll tax on high-income earners to pay for a new and unrelated health care entitlement.
- He then doubled-down on this dangerous new precedent by separately applying the HI tax to investment income for the first time.
- The tax code already taxes investment too much; higher taxes still on dividends, interest and business income increases the cost of capital which will further depress investment and thus job creation (ironic to propose this at the very time the President wants employers to create jobs).
How will seniors be affected by the Medicare payroll tax?
- President Obama's proposed tax hike on investment will hammer seniors particularly hard because their investment income is a major supplement to their pension and Social Security checks.
- Seniors also sell assets to raise income, so raising the tax on capital gains further reduces their resources.
- Lastly, raising the taxes on capital income and capital gains will lower asset values.
- Nearly 30 percent of all stocks are held in retirement savings plans; most of the seniors that rely on the income from these plans for their livelihood are not "fat cat" investors that have been the target of other populist tax hikes.
- They are people that spent their working years saving money for their own retirement in mutual funds, 401(k)s, IRAs and other savings vehicles; this would just punish them for a lifetime of careful planning and saving.
Source: Curtis Dubay, "Obama's Health Plan -- Taxes, Taxes Everywhere," Heritage Foundation, February 24th, 2010.
Browse more articles on Health Issues