Nevada’s Senator By Appointment Only™ Dean Heller (R-NV) would have us believe we can’t afford the provisions of the Affordable Care Act. [Heller] Why? Because, evil of all evils — the act raises taxes. Whoa, now we need to ask the same question which should be raised every time a Republican says “It (whatever IT might be) raises taxes,” — taxes on whom? The GOP controlled House Ways and Means Committee says all the taxes will “cost taxpayers over $675 billion in the next ten years.” [HouseWM]
“Additional 0.9 percent payroll tax on wages and self-employment income and new 3.8 percent tax on dividends, capital gains, and other investment income for taxpayers earning over $200,000 (singles)/$250,000.”
“2.3 percent excise tax on medical device manufacturers/importers*”
“Annual tax on drug manufacturers/importers *
OK, are you a person earning over $200,000 in adjusted gross income annually? If so you’ll see a 0.9% increase on your payroll taxes — the money you pay into your ‘entitlements’ like Medicare and Social Security — programs you are entitled to receive because you’ve paid for them.
Are you a person whose income is derived from dividends, capital gains, and other investments? Assuming you haven’t stashed them behind blockers in the Cayman Islands… If most of your income comes from investments then you’ll see a 3.8% tax increase. If your income comes from your salary or wages, and precious little comes from your Wealth Management Account, then you won’t see an increase here.
Are you a manufacturer or importer of medical devices and equipment? If so, then you’ll be liable for a 2.3% excise tax — If you aren’t an importer or manufacturer of medical devices and equipment, then this tax doesn’t apply to you. And, before we start to fee weepy about this sector of the economy, the Department of Commerce has some nice things to say about it:
“The market was valued exceeded $100 billion in 2010, representing about 40 percent of the total medical technologies industry. U.S. exports of medical technologies in key product categories identified by the Department of Commerce (DOC) were valued at approximately $38.09 billion in 2010, exceeding imports valued at $32.73 billion. With new and innovative technologies coming to market, the U.S. medical technologies industry is highly competitive and well-positioned for future growth.”
The arguments against the imposition of this excise tax are generally NOT that the corporations can’t afford to pay it, but that the taxes might impinge on investments in R&D, and the profitability of the corporation. [CoSpGaz]
Are you a pharmaceutical manufacturing corporation? Are you Pfizer Inc. with a return on equity of 10.66%, and a $178.74 billion market cap? Are you Merck, with an 11.86% return on equity and a $131.21 billion market cap? If you aren’t a pharmaceutical manufacturing corporation then this tax increase doesn’t apply to you.
Let’s look at some of the other taxes involved in the Affordable Care Act legislation:
“Cadillac tax” on high-cost plans *
Annual tax on health insurance providers *
Limit deduction for compensation to officers, employees, directors, and service providers of certain health insurance providers. [HouseWM]
The taxpayers in these cases are the health insurance corporations. The first thing requiring some explication is the “Cadillac Health Plan.” The Kaiser Foundation offers this explanation:
“Sometimes referred to as a “Cadillac” or “gold-plated” insurance plan, a high-cost policy is usually defined by the total cost of premiums, rather than what the insurance plan covers or how much the patient has to pay for a doctor or hospital visit.” […] “high-cost health plan is defined as costing more than $10,200 for an individual or $27,500 for a family, including worker and employer contributions to flexible spending or health savings accounts.” (emphasis added)
What Senator Heller forgot (?) to mention is that (1) the tax doesn’t go into effect until 2018, giving the insurance companies time to make adjustments based on savings, and (2) that the thresholds for the tax are flexible in order to allow for pools of high risk policy holders like police officers or firefighters.
Are you a health insurance corporation? Aetna, Cigna, Anthem Blue Cross? Another major health insurance corporation? If your answer is NO, then this tax increase doesn’t apply to you.
Are you the CEO, COO, CFO or other corner-office executive with a major health insurance corporation? Your compensation is deductible as a business expense — but under the terms of the Affordable Care Act the corporation may no longer be able to take an unlimited deduction for your compensation. This item really has nothing to do with YOUR taxes, but it has everything to do with the deductions corporations are allowed for executive compensation.
Here we go again, when Senator Heller and his Republican cohorts speak of raising YOUR taxes they are very careful to keep it generic, as if YOU includes the Top 1% of American income earners, hedge fund managers, medical device manufacturers, pharmaceutical manufacturers, health insurance corporations and the owners thereof.
But, but but but… the corporations will just pass the tax expenses along to the consumers and we’ll all have to pay! The pass along argument is not a policy decision — it is a corporate decision. The corporation is not required to pass along the tax — it could reduce executive compensation? It could reduce dividends? To do so might annoy the shareholders and executives, but if the corporation thinks more of its shareholders and its executives than it does of its customers, then that in itself says much about the company.
At the risk of facetiousness — here’s the one that must have galled Speaker of the House John Boehner (R-OH) — “Impose 10 percent tax on tanning services *”
Are you the owner of a tanning bed salon? If yes, then after I’ve seen two friends die from skin cancer, I’d like to talk to you some other day. If no, then this tax doesn’t apply to you either.
Protecting Their Bottom (Lines)
So, Senator Heller may say, “Seven-term Congresswoman Shelley Berkley keeps voting for ObamaCare with no regard for the devastating consequences the law has for Nevadans.” However, unless those Nevadans are in the Top 1%, are hedge fund and other wealth managers or get most of their income from investments not wages and salaries, are health insurance corporations or their executives, are medical device manufacturers, are pharmaceutical manufacturers, or tanning salons — those “burdensome taxes” aren’t yours.
We could just as easily argue that Nevada’s Senator By Appointment Only™ Dean Heller (R-NV) stands stalwartly by the side of the 1%, the investors and wealth managers, the pharmaceutical manufacturers, the medical device manufacturers, and the salon service owners — defending their corporate bottom lines.