Paying for the PPACA: Some Aspects of the Law Designed to Increase Government Revenue

Excise Tax on Medical Equipment

A 2.3% excise tax on medical devices will be implemented to help pay for the PPACA. This tax is applied on total revenue and not to profits. The tax is projected to generate $29 billion in revenue over the next decade.  This tax applies to a variety of items, from replacement joints to imaging equipment. A bill to repeal this tax is being discussed in the House of Representatives.

Increase on Medicare Part A Payroll Tax

The Medicare Part A payroll tax is being increased by 0.9% (from 2.9% to 3.8%) for individuals making over $200,000 per year and $250,000 for married couples filing jointly. This tax is expected to generate about $210 billion.

Tanning Tax

As part of the PPACA, a 10% tax on indoor tanning services has been implemented. House Republicans have introduced a bill that would repeal this tax.

Investment Income Tax

For high income households ($250,000 or $200,000 single), the PPACA puts an additional 3.8% tax on investment income. The resulting top-bracket capital gains tax would be 23.8%.

Cadillac Tax

Starting in 2018, the PPACA will levy a 40% excise tax on health coverage costs exceeding $10,200 for single coverage and $27,500 for family coverage. It is expected to generate $32 billion in revenue.

Additional Resources

The Huffington Post Medical Device Tax: http://www.huffingtonpost.com/2012/06/04/medical-device-tax-repeal-bill_n_1567328.html

The Foundry Obamacare’s 17 New Taxes: http://blog.heritage.org/2012/03/25/chart-of-the-week-obamacares-17-new-taxes/

Fox News House Republicans File Bill to Repeal Tanning Tax: http://www.foxnews.com/politics/2011/06/05/house-republicans-file-bill-to-repeal-tanning-tax/

Americans for Tax Reform Comprehensive list of Obama Tax Hikes: http://www.atr.org/comprehensive-list-obama-tax-hikes-a6433

 

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