Taxmageddon Comes Just After the Election
On December 31, shortly after the November election, tax rates will rise across the board in what congressional aides call “Taxmageddon,” notes The Washington Post. Not only will the Bush tax cuts come to an end, but new taxes will kick in to pay for Obamacare’s rising costs:
On Dec. 31, the George W. Bush-era tax cuts are scheduled to expire, raising rates on investment income, estates and gifts, and earnings at all levels. Overnight, the marriage penalty for joint filers will spring back to life, the value of the child credit will drop from $1,000 to $500, and the rate everyone pays on the first $8,700 of wages will jump from 10 percent to 15 percent.
The Social Security payroll tax will pop back up to 6.2 percent from 4.2 percent under the deal approved Friday by Congress. And new Medicare taxes enacted as part of President Obama’s health-care initiative will for the first time strike high-income households.
And this doesn’t even take account into new tax increases Obama has proposed, including but not limited to the “Buffett Tax.” Liberals want to raise taxes to European levels to pay for an expanded welfare state. But many American wealthy people already pay more in taxes than they would in much of Europe, so this idea won’t pay for all the new government entitlements liberals yearn for. (Thus, major liberal spending proposals will inevitably require large middle-class tax increases.) Indeed, the U.S. tax code is already more progressive than the tax codes of France, Germany, Belgium, or the United Kingdom. And America already has higher capital gains taxes and taxes on investment income than most countries, and soon, that will get much worse, since “the tax on dividends will skyrocket from 15 percent to 43.4 percent.”
And that doesn’t even begin to take into account hidden taxes — things that really are taxes, but aren’t officially considered to be taxes. In many European countries, your health insurance contributions are treated as a tax, because they are governmentally-mandated. But in America, your health insurance premiums aren’t classified as a tax, even if you only buy health insurance because you are required to do so by Obamacare’s individual mandate, and you have little need for health insurance. (As a young man, I didn’t go to the doctor or dentist for years. I didn’t need or want health insurance, since it would have cost infinitely more than it was worth.) This makes America’s tax burden look lower compared to Europe than it actually is.
Obamacare imposes onerous and costly government rules on our health care system, creating much more red tape than exists in many European countries, and turns health insurers into tightly-controlled public utilities. It’s really government health insurance in all but name, financed by what are really taxes in all but name (government-compelled payments for overpriced, government-regulated health insurance). Legally, Obamacare’s individual mandate does not qualify as a tax, but economically, it functions a lot like one.
In The Washington Post, a liberal commentator who supports single-payer health care laments Obamacare as the “worst of both worlds,” combining the worst features of socialism and crony capitalism and hiding the costs of government mandates from taxpayers by forcing people to buy “private” health insurance whose every requirement is dictated by the government:
At what point is a middle-class American — who has insurance — allowed to complain about the increasing taxes we pay to finance the national health-care system? After all, what is a tax but an assessment imposed by authority on citizens for public purposes? And that seems a fair description of how our health-care system works. The federal government tells companies which services they must provide. In turn, the companies raise rates so they can meet these requirements and still make a profit. Basically, each time a federal official tells us that “insurance companies” will pay for, say, free condoms or expanded coverage, premiums paid by the middle class go up. Call it an unofficial tax, one collected by private industry instead of Washington.
In many respects, America’s healthcare system is already as government-dominated as some European countries. The fact that America’s hospitals are nominally privately-owned and its doctors are not directly employed by the government does not change this. That does not distinguish America from much of Europe. For example, in France, “doctors and other health care professionals are mostly self-employed,” especially general practitioners,” including all the doctors who have treated my daughter in France. Nor does the government own all the hospitals. For example, the private sector there has “half of all surgical beds.” Nonetheless, given its government’s dominant role in funding and supervising the health care system, France is commonly described as having socialized medicine.
In addition to imposing new taxes on investors starting in 2013, Obamacare contains other new taxes, including substantial excise taxes on medical devices and cosmetic surgery. Manufacturers have announced that they will lay off thousands of employees due to the tax on medical devices.