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Subscribe to RSSUpdated 5:35pm ET Even as President Barack Obama and House Speaker John Boehner struggle to find a way to avoid income tax increases in the New Year on almost all households, a separate set of tax increases which Obama signed into law as part of the 2010 Affordable Care Act (ACA) will begin to affect workers, investors and employers on Jan. 1.
Speaker of the House John Boehner provides an update on the fiscal cliff negotiations, placing pressure on the White House to reveal how they intend to compromise with House Republicans on spending cuts.
Even if Boehner and Obama reach a deal on the “fiscal cliff,” $24.6 billion in 2013 Obamacare tax increases must take effect on Jan. 1 in order for the carefully designed health care overhaul to function in budget terms as its supporters promised it would: not adding anything to future budget deficits, but, according to an estimate by the Congressional Budget Office (CBO), reducing cumulative deficits by $132 billion between 2010 and 2019.
The Obamacare tax increases which begin on New Year’s Day are:
- A 2.3 percent tax on manufacturers and importers of medical devices.
- A limit on the tax deductibility of medical expenses for people who pay some of their medical costs out of pocket.
- A limit on tax-sheltered health flexible spending accounts.
- An increase in the Medicare payroll tax on single earners making more than $200,000 and married couples making more than $250,000.
The delicate balance of tax increases and spending increases in Obamacare will work only if Congress allows the tax increases to take effect, so they can offset the cost of substantial new insurance subsidies and other Obamacare outlays.
But some Senate Democrats are trying to delay at least for one year the tax on medical device manufacturers, which will raise nearly $2 billion in new revenue in 2013 and $20 billion over the next seven years.
President Barack Obama has no public events planned for Tuesday and not many planned for the remainder of the week. Many at the White House and in Congress believe, the less anyone campaigns publicly, the better their chances at striking a deal. The Daily Rundown's Chuck Todd reports.
In a letter Monday, Sen. Amy Klobuchar, D-Minn., Sen. Kay Hagan, D-N.C. and others asked Senate Majority Leader Harry Reid to work to postpone the medical device tax.
Both Klobuchar and Hagan voted for the ACA and Minnesota is home to one of the biggest medical device makers, Medtronic.
A delay in the tax could be part of the year-end fiscal package. “My guess that it would be part of bigger deal before the end of the year,” Klobuchar told NBC News Tuesday.
The Democrats calling for delay are emphasizing the need for medical device industry jobs.
“We’re focused on this because there’s a number of small start-up companies (which would be affected by the tax),” Klobuchar said. The medical device tax was set to raise $40 billion over 10 years “and then reduced in half without real negotiation about how it would affect jobs and the industry. So this one, above all to me, cries out for a change.”
Sen. Kent Conrad, D-N.D., shares the latest on fiscal cliff negotiations.
She said the IRS regulation spelling out exactly how the tax will be collected and enforced was issued last week toward the end of the year “without giving them (the medical device firms) time to figure out how to comply. So we’re simply at this point looking for a delay and if we can make some changes to reduce or repeal it, that would be the goal,” Klobuchar said.
Hagan said, “There’s so much innovation in this field right now and they do create so many good jobs in our country that we have the risk of losing these jobs to Ireland and to many other countries. And that’s the problem,” said Hagan, who is up for re-election in 2014.
When she added that the tax would have “an adverse effect on jobs throughout our country,” she was asked whether the tax – after the one-year delay that she and Klobuchar are requesting – would have an equally adverse effect on jobs in 2014. “We can certainly look at that over time,” she said.
J.C. Scott, senior executive vice president of government affairs for the Advanced Medical Technology Association said, "We appreciate Sen. Klobuchar and Sen. Hagan's leadership on this issue and also appreciate the broad bipartisan support for preventing the implementation of the device tax which is slated to go into effect Jan. 1. Delay of the tax is an important step, but Congress must fully address the device tax as it works to develop a long-term solution to help our economy move forward, reduce our debt and reform our tax code."
Fmr. Gov. Haley Barbour, R-Miss., and NBC News' Chuck Todd join a conversation on the fiscal cliff proceedings. Barbour says he thinks the GOP should accept for a raise in tax rates for the country's wealthiest for a broader package that deals with entitlement reform.
The industry group said that the U.S. medical technology industry supports nearly 2 million jobs and that nearly 43,000 jobs might be at risk if the tax takes effect.
But a Senate Finance Committee aide told NBC News Tuesday, "Medical device companies are expected to enjoy trillions of dollars in growing sales over the next decade, with profit margins that would make Warren Buffett blush. Health reform is providing the medical device industry with 30 million new customers and Medicare is the industry's largest paying customer. Particularly at a time when we're all working to cut our debt, there's no need to single out any industry for a special carve out."
If the call from Democrats such as Klobuchar for delay and “reduce or repeal” reflects a weakening of support for Obamacare’s revenue raisers, that could be worrisome for both deficit reduction and cost reduction since both of those were goals of Obama’s health care overhaul.
Even as they voted for the health care overhaul in 2010, some congressional Democrats said they thought that another one of the tax increases in the law, the tax on high-cost “Cadillac” health insurance plans would never fully take effect because Congress would water it down or repeal it before 2018 when it is set to effect.
Hannah Foslien / AP
Sen. Amy Klobuchar, D Minn., speaks at an election night event at the Crowne Plaza on Tuesday, Nov. 6, 2012 in St. Paul, Minn.
If Democrats delay, reduce or repeal the medical device tax, then the ACA will not cut costs as much as its proponents and the CBO predicted it would.
Senate Democratic Whip Dick Durbin of Illinois made exactly that point in comments to reporters Tuesday: “I’ve met with medical manufacturers in my state. And I think many of them are going to face some serious hardships when it comes to their competitive edge and research. But I’ve also told them quite frankly, ‘We’ve got to make up the revenue. If we’re going to walk away from any part of this revenue, we have to find another source.’”
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Get out your check books people, this is only the tip of the iceberg, all of you who thought ACA was going to be free are in for a big surprise in 2014, go read the bill!!!!
A 2.3 percent tax on manufacturers and importers of medical devices.
Note the word in bold above. Even playing field. If it were to cost jobs here it would cost jovs everywhere, which it will not because these companies are making a fortune. A 2,6% tax is a drop in the bucket.
Then why are the dems trying to put the kabosh on it?
You do realize they don't pay the 2.6%, they pass it on to the consumer. so yeah, it can add up, and we get to pay it. Well those of us that actually pay for these services or premiums.
Screw those medical device companies. They make money hand over fist each and every year. I know a couple of different medical device sales people and they make bank on these products. So if the sales people are making great money, then the companies they work for are making mega dollars and a 2.3% tax on those devices will be a drop in the bucket to their bottom line. If you're so worried about the start-up companies, then you can always limit the tax to companies making over a certain dollar amount in gross sales. Companies making under that (like most start-up's would) pay little or none of the 2.3% tax, while those over it pay the full amount.
YEah, Screw them Joe! And screw those drug companies and the guy that invented the poilio vaccine. "F" 'em all! Everybody knows that when you break your leg you just run some cold water on it and all is well. All big business deserves to pay 100% in tax! All those evil f%ckers that prevent you from getting your share... How dare they. Why if those guys weren't in business you could finally make a decent living... pathetic...
You probably should have left the polio vaccine out of your rant.
Jonas Salk offered his discovery to the world without patent.
That sort of makes your entire rant hypocritical.
Big Pharma didn't pay for his research, and yet they are more than happy to sell it for profit.
That's what is pathetic!
Just more stupidity from the party of Hokus-Pokus. And the Libbernuts just keep chanting O-bam-a, O-bam-a. After they realize what a turd this is they'll blame it on Bush....LOL.
BTW, concrats on your big win.
Yeah I can hear them now if it wasn't for both of those Bush unfunded wars we never would have had to pass this health care law. Damn Bush!
Lmao! It's completely TRUE! These silly liberals must have a boogyman in the closet. Just to keep people scared!
@ ozzie
I am still trying to figure out what an "unfunded war" is?
DFB, I think its one where nobody shows up other than that I couldn't tell you sorry.
BOHICA---Bend Over Here It comes Again...Thanks Barry, vaseline stock should be going up...
Its a tax and that is a fact -- it is also a fact the government has failed at Medicare, Medicaid, Post Office, Social Security, Border Protection, and was paid to watch Bernie and his Walls Street / Banking buddies while they robbed us blind. 2.3% in January with no end in sight just like a postage stamp.
There has to be a mistake here. The Dems said raising taxes doesn't cost jobs but now they say it does. I must be reading something wrong.
Well, you know they had to pass it to know what's in it so now they know! Welcome to Obamacare!
Well wait a minute, I didn't think raising taxes affected jobs. At least that is what all the Democrats are saying about raising taxes on the rich.
Doesn't raising taxes equate to a better economy? I keep seeing Democrats and liberals posting comments about how raising taxes during the Clinton Admin made the economy better.
So which is it, cut taxes and let the businesses grow (hire more people) or raise taxes (make the economy better overall)?
Something is wrong with this logic.
That's because its liberalogic. Please don't try and understand it they just wish that you embrace it.
The Dims love taxes until they realize that one of theirs might have to pay it - then they want a loophole ... lol.
Obama care chickens coming home to roost..
Deal with it libs and Dems you got what you wanted Now you want to run away from it....
HAHAHA
I guess they should have read (and maybe STUDIED) it before they voted.
You've got to give this story credit. Its giving the Obama warning that Obama is going to be lowing their standard of living when they start paying for all the tax increase Obama is heaping on everyone, and the additional costs on everything they consume because of his tax increases.
Put yourselves on the back, you got four more years of Obama telling you he's lowing your taxes while his actions have him raising your taxes.
Austerity has one foot in the door and Obama is swinging the door wide open and inviting it in for a long stay.
Now, where's FeistyRedhead when you need her? Talk some smack to this one.
She's throwing up in a bucket... I hope ignorance and anger are pre-existing conditions
Nobody knows whats in Obama care including Obama, the authors of the legislation and all the rest of us. Don't you just love democracy?
But they had to pass it to find out what was in it according to Pelosi.
Heretics how dare they defy "The One".
Isn't this where the Leftists usually accuse the Republicans of being unpatriotic, mean, evil, greedy, ETC.
Told you this wasn't going to work. We will pay for this. Where are all of President Obama's people telling us how great this is, They didn't read this, so they must have known it was in there right! How much are they paying these politicians to stop this tax that is the only question you should be asking. I call Bull Pelosi knew exactly what was in this she had people read this before she brought it to the floor and tell her that is what she has aids for they read this stuff! This was forced on The people of the US and the President the Speaker of the House and Harry Reid ken exactly what they were doing.
How come I do not see anyone defending the Obamacare TAX increase and blaming Bush or asking the rich to pay their share for them?
That's because it hasn't hit the pocket books of the Obama supporters full force yet, You be seeing them crying like babies and blaming Bush when it does.
Not to worry. Obama will cut a deal to bring in cheap medical devices from China in exchange for another loan he'll need to keep his grovenment running after he pushes over the fnancial cliff.
It will be just like with the solar panels.
I'm a Progressive and have several relatives who work at Medtronic but have to say that the request to delay this tax increase is the wrong thing to do. If everyone who is affected by the various measures being used to reduce the deficit did the same thing we'd never get any place with this effort. Stay the course!
Its not the deficit that has almost shut down our government on August 2, 2011 and October 1, 2012 and could possibly shut down our government on March 1,2013, it the debt and the fact that it keeps reaching the debt limits.
Any added tax to the medical device makers will simply be passed on to the end user/purchaser. Medical costs will soon exceed 20% of GDP. The cost of health care in this country was once cited as a reason for our inability to compete globally even by Obama. Yet I do not see that anything that has been done in this regard other than shift around the burden of payment. A family of four with an income of $85,000 will be eligible for medical insurance subsidies. Are we having fun yet??
Where are all the Leftists decrying the absurdity of delaying anything related to Obamacare?
Don't these Dem's know it's the only way to save the healthcare industry?
Yes Virginia that was sarcasm.
What's the matter demonrats? Did you really think things would be better by now and we could "overlook" these taxes? Maybe Pelosi should have looked into it before signing it into law.
Really????? There is something about Obamamamama that even His Own doesn't like??? Must be they failed to fill the PORK BARREL before the election.
Now the idiots who voted for Obamacare are finally beginning to realize it will cost ten of thousands of jobs and it is full of tax increases America cannot afford.
Here's another tidbit...
The ACA has an allocation of 200,000 people with pre-existing conditions and 5 billion to fund it. So far they only have 78,000 signed up and guess what? Yup, they've blown through the 5 billion. So hopefully the rest of the 122,000 people only have small booboos that can be fixed with a bandaid each or your taxes are going up again.
Way to go Obama! Oh well at least the middle east is peaceful...
How can these Senators fight to get the law passed and now fight against it because of it's effect. They knew the date, what the Act called for and that these enterprises would be affected. January 1st, let the games begin. Happy New Year