The debate over the so-called 2013 fiscal cliff diverted attention away from new taxes set to take effect a year from now as 2014 dawns, mostly a result of the health care reform legislation.. It’s my hope that as the time for these taxes to kick in draws near, people will rise up in protest to delay or overturn many of these taxes.
A Tax on Medical Devices
One tax that has people “up in arms” is the coming tax on medical devices. That affects companies that make different kinds of medical equipment.
This imposes a new tax of 2.3 percent of the profit from gross sales. Critics say the $29 billion that’s expected to reap over the coming decade will reduce funding for research and development. There’s also the question of how that will impact jobs.
At present, the medical device industry has some 400,000 employees in about 12,000 factories. The question has been raised as to whether these companies might relocate in other parts of the world to avoid paying taxes.
A Tax on Investment Income for Those Making $200,000+ a Year
If you make at least $200,000 a year individually, or you file jointly as making at least $250,000, you’ll see a 3.8-percent tax on investment income. That will include profits derived from selling a house.
Higher Medicare Taxes for Those in High Income Brackets
The same people who will see higher taxes on investment earnings will likewise see a 3.8 percent increase on the Medicare payroll tax. And, this will coincide with the threshold for claiming tax deductions for itemized medical expenses rising from 7.5 percent to 10 percent.
Medical flexible spending account annual contributions will also be limited to a maximum of $2,500 in 2014.
Higher Taxes Will Impact a Range of Industries
Lots of industries will be affected, ranging from tanning salons to medical device manufacturers. All of the new taxes together are expected to be worth about $1 trillion.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.