President Obama’s health reform law offers the largest health care tax cut for the middle class in history, giving 18 million Americans a tax credit worth an average of $4,000 each starting in 2014. But Republicans and extreme conservatives are dedicated to repealing Obamacare, and they’re launching wild distortions and falsehoods to do it.
The far-right group Americans for Tax Reform (ATR) is falsely claiming that Obamacare contains a myriad tax increases on middle-class Americans—and they’re trying to twist five Obamacare policies into proof. But like many of these political attacks, ATR ignores the facts. Here’s what you need to know about five provisions in Obamacare that help Americans have access to a better health care system:
The Medical Device Manufacturing Tax
Health reform makes sure that 30 million more Americans will finally have health insurance. More families will have the security that health insurance provides, including coverage for much-needed medical devices like knee replacements or MRIs. Companies that produce these medical devices support the goals of the Affordable Care Act because they know more Americans will benefit from their business. ATR wants Americans to believe that a 2.3 percent tax on medical device makers will hurt these businesses’ hiring and bottom line, but the law simply asks the industries that will gain more business from the expansion of coverage to pay their fair share.
The Obamacare High Medical Bills Tax
Obamacare allows Americans to deduct medical expenses from taxable income if their costs exceed 10 percent of their income, a slightly higher threshold than under prior law. ATR calls this a hard-hitting tax increase, but it once again ignores that, because of Obamacare, all Americans will have access to affordable health insurance, and they will have the security of knowing that their coverage will be there for them when they need it. An illness won’t mean getting billed into bankruptcy because of loopholes and hidden limits in your insurance coverage. As a result, the Affordable Care Act increased the threshold for this deduction, and replaced it with tax credits that make quality health insurance affordable for everyone.
The Obamacare Flexible Spending Account Cap
Federal law allows individuals to contribute pre-tax money special accounts that they can use for qualifying medical expenses. But ATR insists that Obamacare’s cap on Flexible Spending Accounts will translate into higher health care costs for Americans. The health care law limits contributions to these accounts to $2,500 per year to keep workers from abusing these tax-preferred accounts to ameliorate the risk of losing money at the end of the year because of excess contributions. The change has no impact on the vast majority of families—the average contribution to an FSA is approximately $1,200, and an estimated 14 percent of FSA users actually forfeit money at the end of each year because they contributed too much.
The Obamacare Surtax on Investment Income
ATR says an Obamacare provision to claim thata change in the taxation of investment income will strip billions from middle-class taxpayers over the next ten years. This is a complete distortion. Over the course of our lifetime, every American pays into the Medicare Trust Fund, to ensure that our Medicare benefits will be there for us when we retire. Working Americans pay a portion of their salaries and wages to support Medicare. Before Obamacare, unearned income—like investment income—was exempt from Medicare taxes. The health law changed that, but only for married couples earning more than $250,000 a year, and single individuals earning more than $200,000 a year. Wealthy Americans who make a majority of their income from investments shouldn’t be exempt from paying their fair share to make sure the Medicare program is strong for seniors today and into the future.
The Obamacare Medicare Payroll Tax increase
ATR’s claim that the Medicare payroll tax increase hurts employers is just another distortion. The law simply asks the wealthiest Americans to do their fair share to support the Medicare Trust Fund. Couples earning more than $250,000 a year and single people earning more than $200,000 a year will pay an extra 0.9 percent of their income to support the Medicare program and ensure it is there to support the promises we have made to our seniors.
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