this so called ‘fiscal cliff” is merely a smokescreen for the Obamacare taxes that start kicking in from now until 2014.
Even if lawmakers somehow stop the Bush-era tax rates from expiring, taxes are still expected to rise on Jan. 1 — thanks to a trio of new fees tied to the federal health care overhaul.
The IRS this past week published rules for some of the first major taxes meant to help pay for President Obama’s massive insurance coverage expansion. Together, they will raise investment and income taxes on top earners and impose a separate — and controversial — tax on medical devices.
The bundle of fees has been largely overlooked as lawmakers and the White House bicker over the Bush tax rates, with Republicans demanding they be extended for everyone and Obama insisting rates rise for top earners. But that same group of earners is already in the crosshairs under the ObamaCare tax rules published this week.
Starting Jan. 1, investment income for individuals earning over $200,000 and households earning over $250,000 will be subject to a new 3.8 percent tax. Further, regular income above those thresholds will be hit with a .9 percent Medicare surtax. Should the Bush tax rates expire for those workers, those increases will be compounded.
But the rather obscure medical device tax is the one that has stirred the most controversy in Washington and the business community. This week, groups and lawmakers renewed their calls to repeal it as the IRS published its final rules.
“This week, the Internal Revenue Service outlined which medical supplies and technologies will be subject to a tax. Now, everything from latex gloves to pacemakers will become more expensive and in some cases, more scarce,” Rep. Tom Price, R-Ga., said in a statement. “The tax on medical devices harms America’s ability to conduct the necessary research and development to maintain our global competitiveness, resulting in the loss of tens of thousands of jobs and fewer groundbreaking innovations in this field. With millions of Americans unemployed, this simply makes no sense.”
The Affordable Care Act imposed the 2.3 percent tax on medical devices with the goal of raising nearly $30 billion over the next decade.
Equipment makers, though, argue that the tax ends up being much higher than that since it’s on gross sales. One industry spokesman estimated earlier this year that the impact on actual earnings is more like 15 percent.
Already, some have warned that the tax will stifle growth. Indiana-based Cook Medical earlier this year announced it was scrapping plans to open five new plants because of the tax.