ATR: Tax by another name

OPINION:

The following exchange took place between Rep. Pat Tiberi, Ohio Republican, and Austan Goolsbee, chairman of the White House Council of Economic Advisers, during a Jan. 26 House Ways and Means Committee hearing on the new health care law. (Americans for Tax Reform fact-checked Mr. Goolsbee’s responses.)

Mr. Tiberi: A new tax on individuals who did not purchase government-approved health insurance?

Mr. Goolsbee: Uh, I don’t think that’s an accurate way to describe it, no.

Mr. Tiberi: Not a new tax?

Mr. Goolsbee: I don’t think that’s an accurate way.

(Americans for Tax Reform: The individual mandate excise tax takes effect in 2014 and, when fully phased in two years later, will require those not purchasing “qualifying” health insurance - as defined by the government - will have to pay a tax equaling 2.5 percent of adjusted gross income (AGI) or $695, whichever is greater.)

Mr. Tiberi: A new ban on the use of flexible savings accounts, HSAs (Health Savings Accounts), HRAs (Health Reimbursement Accounts), on using pre-tax income to purchase over-the-counter drugs?

Mr. Goolsbee: Uh, I, I don’t, that’s not a tax increase of a normal form, and that’s part of a broader reform effort, obviously.

(Americans for Tax Reform: Under Obamacare, an individual may no longer use Flexible Savings Accounts (FSAs), Health Savings Accounts or Health Reimbursement Accounts to purchase over-the-counter medicines. The 40 million Americans using these accounts can no longer purchase items such as aspirin, cold and flu medicine, menstrual cramp pain relievers, antihistamines and ant-acids.)

Mr. Tiberi: An increase from 7 1/2 percent to 10 percent of income the threshold after which individuals can deduct out-of-pocket medical expenses?

Mr. Goolsbee: (Shakes his head).

Mr. Tiberi: Not a tax increase?

Mr. Goolsbee: Uh, I, as I’m saying, the, I do not consider the Affordable Care Act as a whole to be a tax increase on people making less than $200,000.

(Americans for Tax Reform: This provision puts a tough burden on individuals with particularly high medical expenses. Currently, an individual can deduct any amount of income they spent on medical expenses to the extent those expenses exceed 7.5 percent of AGI from their income. The Obamacare law raises that threshold to 10 percent. As a result, families will be able to deduct less in medical expenses than they can currently. By shrinking this deduction, Obamacare increases - again - the total amount of taxable income. This means those individuals are going to have to pay more in taxes.)

Mr. Tiberi: There are two more. Impose a new $2,500 cap on a family’s ability to use pre-tax dollars to fund an FSA?

Mr. Goolsbee: I … could you …

Mr. Tiberi: $2,500 cap on …

Mr. Goolsbee: $2,500 cap - I don’t, I don’t consider that a tax increase.

(Americans for Tax Reform: Taking effect in January 2013, this is another provision in Obamacare that leads to a substantial amount of pre-tax income spent on medical expenses becoming taxable income, again raising taxes by raising the amount of income that an individual is taxed on.

Currently, families can put their pre-tax income into an FSA without a federally imposed cap to pay for various medical expenses. This greatly helps with parents trying to pay for expensive prescriptions for their children or parents who put money into the account to pay tuition for special-needs schools or tutoring. By placing the $2,500 cap on the amount of pre-tax income that can be used in this way, families will see their taxes potentially skyrocket, depending on how much over that amount they currently put in their FSAs. This cap has no exceptions of any kind, not for special-needs children, not for Americans making less than $200,000 per year and not for families making less than $250,000 per year.)

Mr. Tiberi: A new 10 percent tax on indoor tanning services?

Mr. Goolsbee: (Chuckles) Uh …

Mr. Tiberi: Not a tax increase?

Mr. Goolsbee: Well, that seems like a strictly voluntary, uh, thing that one could choose.

Mr. Tiberi: But not a tax increase?

Mr. Goolsbee: (Shrugs).

(Americans for Tax Reform: Mr. Goolsbee’s laughter shows his cluelessness as to how this tax has been impacting Americans since it went into effect July 1, 2010. This petty, burdensome, nanny-state tax affects both the business owner and the end user. Industry estimates from the Indoor Tanning Association show that 30 million Americans visit an indoor tanning facility in a given year, and more than 50 percent of salon owners are women. There is no exception granted for those making less than $250,000.)

This account was provided by Americans for Tax Reform.