I just finished a tax training course on the new Health Care Bill. And because I care I am sacrificing my nap to share a couple things I learned with you all! This isn't just something I heard, these are things I received tax accountant training on today.- The Bush tax cuts that set income tax levels at the 10%, 15%, 25%, 28%, 33% and 35% are set to expire and will be replaced next year by 15%, 28%, 31%, 36%, and 39.6% brackets.
- Middle class tax rates are set to go from 15% to 28% next year. That's you families making about $70,040 – $141,419 a year (and single people making $35,020 – $84,872). Those of you in that range with families will attest that while you're comfortable (and just barely made it there!), you're not in the lap of luxury and definitely still have to watch your money. Better budget on your monthly income getting significantly smaller as you will be handing over an extra 13% of your income in taxes next year. Doesn't everyone remember Obama's repeated campaign promise that "the middle class won't see their taxes raise one dime?" Good to know middle class is the hardest hit in this rate increase. Nice.
Now for one (of many) piece of this monster, ridiculous Health Care Bill that should get everyone's, except the most true, delusional socialists or communists at heart, blood boiling. I've already shared item after terrible item contained in this health care bill on my blog, but I honestly didn't know this one. And it is for sure, tax teachers are teaching it in training.
- In 2014 it will be illegal for an insurance company to have any differences in health insurance premium costs based on health, gender, race, or ANYTHING.
Individual A: nonsmoker, healthy eater, exercises, only medical history includes gall bladder removal. (this is me)
Individual A's insurance paid $1000 on claims made this year.
Individual B: smoker of 50 years, drinker, obese, chronic heart problems, liver disease, cancer of mouth, etc. etc.
With the same insurer as Individual A, insurance paid $50,000 on claims made by Individual B this year (this is not unheard of when you consider my insurance paid $7000 on Cameron's healthy birth)
Insurance Company: has 50,000 + 1,000=51,000 in costs to pay for between individuals A and B. (We'll even leave pesky overhead out for easiness sake)
Add a 2% profit of 1,020 (honestly guys, not bad, who is in business at all if they can't turn a profit?)
Total cost for insurer to recover 51,000+1,020=52,020
*Econ 101 bonus* Insurer passes costs on to customers A and B through premium costs
$52,020/2= $26,010 (because remember it is illegial to price discriminate for any reason, even health, therefore premiums must be perfectly equal between A and B)
Congratulations Individual A for keeping yourself healthy and only needing $1000 of medical work last year! Your reward? $26,010 in premiums this year! Wait? Ridiculous? Well, you can't not have health insurance because it's the law, you know!!
Who wouldn't turn to government options at this point? This is exactly why this bill has signed the death order of private health insurance companies and millions of people's jobs associated with them--and it was meant to. Sure, everyone hates insurance companies--I myself was rejected from coverage twice, paid 5 months of COBRA prices, and have spent countless hours on the phone fighting with them, and I'm only 26 and healthy--but I promise you that dealing with the government will be so much worse, especially when there is no one else you can go to. Think Social Security office efficiency in your doctor's office, and joked-about government worker work ethic and skill for someone with your life in their hands. Make no mistake, the powers that be in Washington would like nothing better than to take all your money and make all your decisions for you.
As someone who has now been initially trained on the bill, as I jotted down notes on provision after provision I found myself thoroughly confused as to who this bill is supposed to benefit! There are provisions that cause both the healthy and unhealthy to lose, the old and young, the rich and middle class and poor, the large and small businesses. (And especially the married. This bill introduces the largest of what is known as the "marriage penalty" in US tax history.) In short, everyone loses with this bill. Who wins? Politicians and bureaucrats who live to sieze power and money.
Just a friendly reminder that elections are upon us! Let's use our voice wisely (and loudly) why we still have one!
11 comments:
We don't always agree politically, but maybe business school has made me more conservative, because I agree with you! I'm glad you mapped it all out too, I think if you don't have finance training sometimes it's hard to see the picture. I almost died when I got a pay cut, insurance cut, and a tax increase...man we LOVE our teaches in this country don't we?
My sister Lindsey Havican suggested I read your blog, and I am so excited because apparently we would get along great! On subject, my husband is in the military, so we have government health insurance. While I will admit to loving getting our coverage for free, we've already run into the "you get what you pay for" situation even though he's only been in a year. I could list quite a few examples, but it would be long enough to warrant its own blog post. (Hmmm...maybe I should head over to mine and get typing!) Anyway, I'll just say for now that people really don't know what they are in for!
When I started reading about all the tax increases, the first thing I thought about was how Obama PROMISED that the middle class would not have their taxes increased one dime. And then you mentioned it. SO LAME!!!! I'm so mad and furious about this whole thing. WHAT THE HECK!!??? is all I have to say!
Remember Obama over and over..."I will not raise taxes on the middle class: Ha.
I don't know where you're getting these numbers, they're simple incorrect. Look here instead:
http://tinyurl.com/2d9eafd
Obama's budget extends the cuts for the middle class, but even if the extension isn't passed by congress this year, you'd have to earn more than $380,000/year to see an increase of anything more than 3% in 2011.
Requiring health plans to accept everyone in their pools is the entire point of the recently passed reform bill. Everyone will be guaranteed coverage and the costs will be shared by 300 million + people in the country. The example you outlined comparing yourself to an overweight smoker is extremely skewed and not a good representation of the actual effects of the bill.
Thanks for the info! Who is this "Author?" I looked at his blog and it's all about UTA- RANDOM!
Anyway, I looked at the link he/she posted and I saw the chart in the link was done by the Brookings Institution... a progressive think tank.
So I'm wondering, what did you learn, and why did what you learn seem to contradict the link they sent you?
I'll check back. And by the way, you SHOULD respond to their comment.
To Author: Guaranteed health care coverage DOES NOT mean guaranteed access to good, timely health care.
The numbers in the graphic from the "liberal" Brookings Institute are the same as those from the US Treasury and from the Congressional Joint Committee on Taxation.
See pages 74-78 here:
http://www.treas.gov/offices/tax-policy/library/grnbk09.pdf
and pages 26 and 28 here:
http://www.taxpolicycenter.org/taxtopics/budget/upload/jcs-2-09.pdf
If the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA or the Bush Tax cuts) are allowed to expire, the largest tax bracket increase anyone will see is a 4.6% increase for those earning more than $379,000.
The claim in the original post that middle class families will see a 15% tax increase is baseless.
To Author:
Well, you're well educated and well-read. So, whether we agree on policies and politics, good job for staying informed. At least you're invested in the future of our country.
And as far as the Brookings Institution being "liberal"- they are! They admit it themselves. So there's no point in acting like they're not.
Also, allow Mindy to respond on the Tax Training for Accountants that she received before completely discrediting her. Perhaps one of you is misinformed.
Just a couple of quick comments and then I'll stop hijacking the comments on your blog. I'm not trying to discredit anyone, I just came across this blog by happenstance and thought I'd share a different point of view. My earlier comments were probably more harsh than necessary.
The tax bracket numbers that you posted are actually correct, I think that you're just comparing the wrong percentages across the years to arrive at the jump from 15% to 28% you described above.
If you look at the numbers in the first link I posted you'll see what I mean. Taxpayers in the current 15% bracket would remain in a 15% bracket, even if the tax cuts are allowed to expire. It's only taxpayers in the current 25% bracket that would see an increase to a 28% bracket, an increase of 3%, not the 13% jump you mentioned.
The Bush cuts created a new 10% bracket for those earning less than $8,500 a year which would go away without an extension. Such people would move back to the 15% bracket. The increase is 5%, but those who earn less than $8,500 rarely have any tax liability anyway and usually make money when filing their tax returns through credits and deductions. Those earning more than around $380,000 are the only ones that would see a real increase of anything more than 3% as they would jump from a 35% bracket to 39.6%, and increase of 4.6%
Again, this is all only if congress doesn't extend Bush's cuts for families earning less than $250,000/year.
To say that President Obama has somehow gone back on a campaign promise is disingenuous as the budget that he has proposed does exactly what he campaigned on and doesn't raise taxes for families earning less than $250,000/year.
:(
This, seriously, makes me sick. Work hard this election cycle - get out and volunteer on a candidates campaign of your choice.
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