You heard it a thousand times from Obama, the media, the punsters – everybody! – that Obama just had to raise taxes on top wage earners so taxes on the middle class would not go up.
Hello! Taxes on the middle class went up. Here’s why:
(1) The 2% payroll tax for Social Security expired. For a $50,000 annual income that’s an extra $1000 a year in taxes taken out of your pay check. It was lowered from 6.2% to 4.2% to “stimulate” the economy. Apparently the economy is doing fine now.
There are five of the Obamacare taxes that are especially significant:
(2) The Individual Mandate Tax which will be 2.5% of adjusted gross income, starting at $695 in 2013 and at a full 2.5% by 12016.
(3) If you have a “Cadillac” insurance plan you will pay 40% of its value as an excise tax. In other word, it will cost you or your employer 40% more.
(4) Early withdrawals form your Medical Savings Plan will be charged a 20% fee versus the current 10%.
(5) The Medical Itemized Expenses hurdle goes from 7.5% to 10% (the amount before you can deduct the expenses from your federal taxes)
(6) The Medical Cabinet Tax prohibits deductions for any over-the-counter medications other than insulin.
(7) Flexible Spending Accounts (used mostly for special needs kids’ education and care) is now capped at $2500, down from unlimited.
(8) Non-medical withdrawals from your Health Savings Account will go up from 10% to 20%.
Generally, these Obamacare taxes (and there are a total of 20 new taxes) are priced at about $100 billion a year. That’s roughly the same as the payroll deduction holiday (valued at $110 billion a year).
All told, the average middle class family will experience a 4% tax increase on their gross income. That’s about $2000 a year.
Add another $1000 a year by the time the full individual mandate (and other taxes) kick in, and you have a net increase of 6%.
No new taxes, my ass.
