Obama's Shattered Middle-Class Tax Pledge

Thursday, 12 Sep 2013 07:07 PM

By Grover Norquist

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From the ATR website.

Today marks the five-year anniversary of President Obama's "firm pledge" not to sign "any form of tax increase" on families making less than $250,000 per year.

Speaking in Dover, N.H., on Sept. 12, 2008, then-candidate Obama said:

"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."

But Obama's "firm pledge" to the American people was thrown out the window when he signed Obamacare into law. At least seven of the 20 new or higher taxes in Obamacare directly hit families making less than $250,000:

1. Obamacare Individual Mandate Non-Compliance Tax:
Starting in 2014, anyone not buying "qualifying" health insurance — as defined by President Obama's Department of Health and Human Services — must pay an income surtax to the IRS. The Congressional Budget Office recently estimated that six million American families will be liable for the tax, and as pointed out by the Associated Press: "Most would be in the middle class."

Americans liable for the tax will be forced to pay according to the following schedule:

  1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016 2.5% AGI/$695 2.5% AGI/$1,390 2.5% AGI/$2,085









2. Obamacare Flexible Spending Account Tax:

The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family's basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next 10 years. Now, a parent looking to sock away extra money to pay for braces will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars.

Needless to say, this tax will especially impact middle class families.
There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. Nationwide there are several million families with special needs children 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 tax provision will limit the options available to these families.

3. Obamacare High Medical Bills Tax:
Before Obamacare, Americans facing high medical expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.

According to the IRS, 10 million families took advantage of this tax deduction in 2009, the latest year of available data. Almost all are middle class. The average taxpayer claiming this deduction earned just over $53,000 annually. ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200-$400 per year. To learn more about this tax, click here.

4. Obamacare Medicine Cabinet Tax:
Thanks to Obamacare, since January 2011 Americans have not been able to purchase non-prescription, over-the-counter medicines from their Flexible Spending Accounts or Health Savings Accounts. Families often rely on over-the-counter medicines to get themselves through the colds, fevers, and aches and pains of daily family life.

5. Obamacare Tax on Union Member and Early Retiree Health Insurance Plans:
Obamacare imposes a new 40 percent excise tax on high cost or "Cadillac" health insurance plans, effective in 2018. This tax increase will most directly affect union families and early retirees, who are likely to be covered by such plans.

6. Obamacare 10 Percent Excise Tax on Indoor Tanning:
This Obamacare tax increase has the distinction of being the first to go into effect (July 2010). Slipped into the bill by Sen. Harry Reid (D-Nev.) behind closed doors in the middle of the night, this tax hike replaced the planned Obamacare "Botax" on cosmetic surgery. This petty, burdensome, nanny-state tax affects both the business owner and the end user. Making matters worse: According to a Treasury Inspector General for Tax Administration report, the Obama IRS didn't bother to issue compliance guidelines until three quarterly filing deadlines had passed: "By the time [IRS] notices were issued, tanning excise tax returns had been due for three quarters." This is yet another sign that the Obama administration is ill-prepared for Obamacare implementation.

7. Obamacare HSA Withdrawal Tax Hike:
In effect since 2011, this Obamacare levy increases the tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

None of the above Obamacare tax increases contain any exemption whatsoever for families making less than $250,000 per year: All are violations of Obama's "firm pledge."

Grover Norquist is president of Americans for Tax Reform, a coalition of taxpayer groups, individuals, and businesses opposed to higher taxes at the federal, state, and local levels. The coalition organizes the Taxpayer Protection Pledge, which asks all candidates for federal and state office to commit themselves in writing to oppose all tax increases. Read more reports from Grover Norquist — Click Here Now.

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