SCOTUS Upholds Affordable Care Act!

Kam, according to what I've been reading, under this plan, if you don't have insurance and if you cannot or will not buy it, then the IRS collects the penalty/tax/fee/(whatever anyone wants to call it).

I, too, wish other politicians would step up to the plate with a better, well-thought-out plan.

Yes, only about 1% of people will be subject to the tax associated with the individual mandate, but that is not the only tax associated with the law. These other taxes will affect virtually every American either directly or indirectly.  When businesses are hit with higher taxes or other expenses, they tend to pass them along to the consumers of their goods and services. 

According to Americans for Tax Reform:

There are twenty new or higher taxes in Obamacare. Some have already gone into effect (the tanning tax, the medicine cabinet tax, the HSA withdrawal tax, W-2 health insurance reporting, and the "economic substance doctrine"). Several more will go into effect on January 1, 2013. They include:

Medicare Payroll Tax Hike takes effect on January 1, 2013. The Medicare payroll tax is currently 2.9 percent on all wages and self-employment profits. Starting in 2013, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8 percent rate.

"Special Needs Kids Tax" comes online on January 1, 2013Imposes a cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. 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. This Obamacare cap harms these families.

Medical Device Tax begins to be assessed on January 1, 2013. Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for < $100.

"Haircut" for Medical Itemized Deductions goes into force on January 1, 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. Waived for 65+ taxpayers in 2013-2016 only.



Read more: http://atr.org/taxmageddon-hit-americans-six-months-today-a7005#ixzz1zcEhMWuq

Children engage in magical thinking, but adults should be have outgrown that by the time they become adults.  You don't get something for nothing.  Someone is paying for it, and the more people you exclude from responsibility and put off the payment being due, the larger the burden on those who are left paying the bill, and the larger the bill due to interest on the debt in addition to the original costs.

Nobody needs insurance, we all need access to quality affordable care.

So someone who makes more than $200k/year should pay more in tax because you have not done as well as they have? Sort of blows a hole in your "republican philosophy", no? Regarding FICA tax, why should someone making more than $110,100 pay more? They cant draw more so how is that unfair?

We pay for them now.  If the figures from Mass. are an indication there should be a steady drop in the uninsured.  People may game the system but doesn't the AHA leave in collections from the hospitals and Dr.s?  At that point couldn't they go for the whole amount, not the fine level?

Found an interesting and thoughtful article about the Mass. insurance and health care costs.

http://www.boston.com/lifestyle/health/health_stew/2011/11/does_massachusetts_have_the_na.html 

So someone who makes more than $200k/year should pay more in tax because you have not done as well as they have? Sort of blows a hole in your "republican philosophy", no? Regarding FICA tax, why should someone making more than $110,100 pay more? They cant draw more so how is that unfair?

Up until the $106,800 benchmark, the fica tax is flat...no matter what one's income is, they pay the same rate.

btw, there is nothing in this philosophy that is about "punishing someone who makes more money," as far as increasing the FICA tax rate for those making above $200,000.   It's about the marginal utility of the last dollar earned.  Someone making $20,000 a year will place a much higher value on their last dollar earned versus someone making $200,000 a year.  This is the concept behind a Progressive Rate Structure (which is what our income tax is based one - though that is disappointedly disappearing).  It's kind of like inflicting pain equally, or fairly.  And it appears a ZERO rate is still being applied to monies earned above $106,800 and $200,000 under ACA.

While we engage in the exercise of free debate and discussion over an issue that affects us all, I just wanted to mention that HBO is running the entire John Adams miniseries today. It is a wonderful historical piece that can remind us of the efforts of so many to create this wonderful country we live in.



We can agree or not but we are free to do it. Free. So many aren't.

Remember, our doctors and surgeons are in the high-income bracket.  And we want them as happy as possible.  In fact, I wish they didn't have to pay taxes at all. 

Kam, I remember first hearing the flat tax idea from a Democrat (Jerry Brown).

Mardi- we have a different idea of "fairness", so beyond helping each other understand each other's algorithm, it's sort of hopeless that we'll ever agree.



I believe in a progressive tax structure. I believe a poorman's last dollar has far more value to that man than the richman's last dollar does to him. They are not equal dollars and therefore tax rates must be different to be fair, otherwise more pain is inflicted on the poorman. It's the same economic principle of why we pay different income tax rates, in a progressive way.



FICA is very unfair. The more one earns, the less they pay (over the threshold). It disproportionately taxes those earning less than the threshold.

I swore I would stay away from here but when the issue of the capital gains tax is raised, I can't stay quiet and not speak up. Revenue earned through capital gains is completely different from revenue earned as income. I see red whenever the point is made that the capital gains tax should be the same as the income tax.  

When you are employed, you earn income as part of the terms of your employment. So long as you meet the terms of your employment, you earn the income, 100% guaranteed. You come to your employer on January 1st and by doing the agreed-to job, on December 31st you leave with $100. Any money you had before you started your job is yours and is never put at risk.  If you started the year with $100 in the bank and earned $100 by working for the year, at the end of the year you will have $200 in the bank.  (Yes, a simplistic example.)

When you invest, you hand your previously earned money and all control of this money, over to a company so that they can use the money to grow their business. You don't control what they do with that money.  You are hoping they use it well and grow the business but sometimes that's not what happens. Not all businesses are successful and sometimes the money you invest is lost. So if you invest $100 on January 1st, on December 31st you might have $110 but it's also possible that you might have only $60. Capital gains are never guaranteed. And in fact your investment that is meant to generate capital gains might be partially or completely lost. You risk losing the money that you had already earned.

Not only had you already earned that money, but you'd already paid taxes on it. Let's remember that money that is invested and put at risk in order to generate capital gains is money that has already been taxed. Think about the employee who earned $100 for working for the year. The $100 is taxed at the full income tax rate. After paying taxes, the individual has $70 left.  Now this individual has the choice of putting the remaining $70 under his mattress or putting it in a bank account, or he could decide to invest, hoping to earn a greater return through capital gains. But by investing, he is risking that $70, on which taxes have already been paid.   

That's why capital gains are taxed at a lower rate. Capital gains are based on a gamble. Without a lower tax rate to incent people to invest, why in the world would anybody put their money at risk?  Put it in the bank, or stash it under a mattress. Your money may not grow but there's no risk that it will disappear. Of course if everyone did that, where would the economy be? The economy runs on these investments.  

So no, the lower tax rate on capital gains does not mean that everyone else is picking up the tab for the wealthy. The wealthy pay full tax on any employment or interest income they earn, i.e. the income they earn without risk. It's only when they put their already taxed money at risk, for the betterment of the economy (and hopefully, themselves), that they are able to benefit from a lower tax rate - if they are fortunate enough to earn capital gains and not lose some of that investment.   

FICA is designed to pay for Social Security.  Social Security payouts are based on the recipients income (and therefore contributions) while they were working.  There is a cap on the amount that Social Security pays out, and the cap on the tax to pay for it aligns with that cap on the potential payout.  Those who pay more in get more out, but there is an upper limit on both. 

Should someone who only worked for a couple of years at minimum wage get more in Social Security payouts than they ever earned, forget about what they contributed to the system?

How about someone who saved money in an IRA or who has a good pension, should they not be entitled to get any payout from Social Security even though they paid in the maximum or near the maximum contribution for decades?  That would leave more money in the system to pay for those who didn't pay in at all.  Would that meet your definition of fair?

PatMom Social Security is not an investment program, it is a tax designed to provide a safety net for the old, the disabled and dependents who lose parents.   FICA tax is based on income, unless you are rich.  If you are rich, it is based on part of your income.  If you are poor, the tax is based on your whole income.  That latter is wrong. 

The ACA raises the Medicare portion of FICA, not the SSI portion.  There are no caps on what someone can recoup from Medicare, that I know of.   Likewise, there are no guarantees everyone will have the opportunity to avail themselves of Medicare in their lifetime, even while paying in.  

Should someone who only worked for a couple of years at minimum wage get more in Social Security payouts than they ever earned, forget about what they contributed to the system? 

Yes, if they qualify (i.e become disabled).  That's the whole idea.  Personally, I'm not up for seeing a society without this type of a safety net, whether I ever dervive a benefit or not.

"That we all know is subject to tremendous manipulation as well as illegal behaviors to avoid taxes."

Maybe I'm in the minority, but I don't know that.  Naively perhaps I believe that most people are basically honest. Of course most everyone - wealthy or not  - looks for as many legal deductions as they can find in order to reduce and minimize their taxes. But I simply don't believe that most people intentionally break the law to avoid taxes. I'm sure that there are some who do but I'd guess that those illegal behaviors are split pretty evenly between those who are wealthy and those who are not. There are crooks at all income levels. 

I will say that I think all the deductions and loopholes in the U.S. are nuts. We have them in Canada too but they are nothing compared to what you have in the U.S.. I've lived and worked in the U.S. so I've paid taxes in both countries and for the past couple of years I've been responsible for my parents' tax submissions to the IRS. You guys need tax reform! Cutting the deductions and implementing a flat tax (with a lower tax rate on capital gains) might be a good idea.

As an FYI, in Canada capital gains are taxed at 50% of the rate of all your overall taxes, whatever your tax rate turns out to be based on your income and deductions. This is achieved by counting each dollar of capital gains revenue as only $0.50 when the cap gains are added into your total income. So if you are in the 22% tax bracket, you in effect pay 11% tax on your cap gains (or more accurately, you pay 22% tax on 1/2 your cap gains and 0% tax on the other half).  If you are in the 40% tax bracket, you pay 20% tax on your cap gains. I think that's fair, since it provides a benefit to those who put their money at risk by investing it, but it also looks at total income, with 1/2 of the cap gains included, to determine your overall tax rate.  

Beesie -  I think there are arguments on both sides of Capital Gains taxation rates.  Let me venture a few on the other side with the caveat I haven't thought as much about this one as I have about income tax.  Btw, I often call it the "Paris Hilton tax" as I envsion this woman sitting by the pool earning all of her income passively, living off of her grandparent's investments.  I might have to change this to the "Mitt Romney tax" as all of his income is passive, as well.  This is not productive or creative, unless you like that it allows him to run for President while not working.

Now isn't the point of a low capital income tax rate to induce investment?  Then why is that we are constantly hearing of the trillions of dollars "sitting on the sidelines" these days??  When Capital Gains tax was taxed like Ordinary Income, during the go go 90's, there was never such talk.   That's because investment is driven by demand, not supply, and demand has dried up.  Whether 15% or 35%, capital will be invested if money is to be made.  So "risk" only drives a binary decision - to invest or not invest.  Make money, or sit on the sidelines....not the rate.

As far as these capital investments "bettering the economy," other than my comments about Paris Hilton and Mitt, I do believe it creates a sleugh of jobs for accountants and money managers who expend an enormous amount of creative energy in the business of profiting off of financial activities under the capital gains tax treatment banner.  I hardly think these activities benefit society.

Not to mention, a Hedge Fund or Private Equity Manager gets paid out of profits on other's money as opposed to fees for services and his/her "income" is taxed at this lower capital gains rate.

Kam, you miss the point.  Life is not fair, and no government has ever been capable of making it so.  Anytime there is manipulation to make things "fair" for someone, they become less "fair" for someone else.

Every parent understands that you cannot successfully treat your children exactly the same all the time.  Even identical twins have different needs, such as when one is sick and the other isn't.  To make the healthy one stay in bed all day would be as cruel as not allowing the sick one to get the extra rest they need to get well.

For government to punish those who do well financially in order to reward those who choose not to work as hard, or who make bad choices along the way in order to be "fair" to those who aren't doing as well removes much of the incentive to work hard and to make good choices. 

One of those choices is which investments to make.  Those that carry more risk tend to deliver higher returns when they actually deliver returns.  The flip side is that you can lose the money you invest as well as the profits.  I know many people who were doing quite well investing their childrens' college funds in the stock market.  The kids who are now in their mid-twenties and older had plenty of money when it came time for them to attend college.  Many of those who are in their late teens and early twenties found out that the money they were counting on disappeared in the stock market downturn.  Those whose investments were more secure never had the huge wealth on paper, but the money they had saved for years was still there when their kids were deciding which college to attend.