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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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This represents the epitome of why we are in such a financial mess in this country. We want it all, but don't want to pay for it. The elected reps who are challenging the new tax are the same people who voted for it. The tax was clearly spelled out in the first release of the law. But now it's here - it's real, and they start in with the crocodile tears. It's the classic "not in my back yard" syndrome. The per capita cost of health care in the US is by far the highest in the world, yet the quality of care is way down the list compared to other nations. Obamacare will drive it up even more, according to those who drafted the bill. Let's just face the music. It's going to cost... a lot. Business and citizens will all feel the pinch. That's the price of universal health care done the American way.
No delay. They knew this was coming down the pike.
They should not have signed up for it in the first place if they did not not what the impacts would be down the line. Suck it up since you didn't have the nerve in the first palce to say NO!!!!!!!!!!!!!!
and so it continues. More Demos trying to cut the income needed to even begin to make the Obamacare fiasco work, and, ultimately, more costs heaped on the poor tax paying public, especially the older citizens who worked so hard and paid so much into the medicare system. It should be called the Obamascam
Fig em, let the tax rise happen, and remember in 2014....
Can you say fustercluck?
I see so many people try to pin this mess on one or the other. This mess is not just the republicans or democrats or doctors or hospitals or pharmaceuticals or businesses fault. It is everybodies mess, and the cause can be summed up in one word, and that word is greed.
This demonstrates the importance of reading the damn bill before you vote for it. I would normally feel some degree of magnanimity towards the Dems since this will cost jobs. But I have none. I have nothing but contempt for the condescending bunch of jerks who rammed this through without any support or input from Republicans and scolded all of us questioned the contents of this bill as "wanting old people to die".
Now you own it. Deal with it.
Wait, these democrat senators are admitting that higher taxes kills jobs? If only those Obama supporters who pay no taxes would realize this.
Pelosi said we would have to vote for it and then find out what's in it...........this is just another part of finding out..........Just demonstrates yet again how stupid the democrats were when they marshaled their minions to sign up for something based on "good faith" in their leadership.........So far it looks like the legacy of obamacare is a mess, and it's only just starting............. The democrats have duped the American people again, yet their mindless lemming followers will continue to think obama's gonna pay for my mortgage, obama's gonna pay for the gas in my car.........obama and his democrat lemmings are carrying out their plan to turn the US into a 2d class eurosocialist country, and doing it by punishing those who have worked, saved, sacrificed to achieve what successes they now enjoy.
I remember when Ford and GM said that if they had to put seat belts in cars, they would be so expensive that no one would bu them. This sounds like the same scare. A small tax on such a lucrative industry is not a burden on anyone.
On January 1, 2014 congress and their staff lose their special health care plan and will then be covered by OBAMACARE. This is a fact. Some of you need to read the law before you criticize it.
All Democrats. Go figure. Vote for it without reading it and then ask to be exempt from it.
It's no wonder people are shooting up malls.
Notice these new taxes are on IMPORTED medical devices NOT American made medical devices.
If they make a self-lubricating catheter in Ohio or Utah it will not effect the cost AT ALL
How would imported medical devises impact employment? Think you are full of it.
If the Democrats want to defer collection of some newly imposed tax, shouldn't there be a delay of in some newly scheduled benefit.
Minnesota is home to one of the biggest medical device companies. Wonder of wonders. How much did they put into the political coffers?
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. Hmmmmmm----So what your saying is raising taxes adversely effects the economy which would lower government revenue.. Why are we insisting on raising taxes in these "fiscal cliff" talks again?
LOL Do you have any idea how much they charge for medical equipment, and devices? (not to mention meds and med supplies because we're not talking about them). Boy, sure wouldn't want to mess with them profits. Medicine in the US has long since moved focus from patient to profit.
Check your insurance statement next time you have a procedure or tests done.
And thanks to Obamacare, now they'll charge more.
When I was signing up for my benefits for next year, I could only opt to put $2,500 into my FSA. Last year, I could put in $10,000. We have a lot of health issues in my family, and we will be spending at least $10,000 out of pocket. But, what that means is that $7,500 of that $10,000 will be after tax, which effectively increases our tax rate (federal and state) by about $2,500. And that is just due to the changes in the FSA amount. Who knows what else will hit us?
There was absolutely no good reason for this limit, either. It's directly taxing the middle class. (Or what's left of them.)
As the democrats realize the madness and folly of Obamacare, this will become a running joke.
The late night commedians should have a field day with this.
Oh wait.......they're all lib's, they'll blame it the republicans.
Never mind.
Obamacare is just another mirror image of the government college tuition, just like the cost of college expect big cost increases in medical care
comrade obama say's ok takers, time to get your wallet out now!!!
American voters are so stupid!!!
Medical device makers - special interest at work ??
So now tax increases will be bad for business? Nevermind that taxing medical devices only ADDS to the cost of healthcare.
Tough shytt democrat-communists. You slugs need to read what you are voting for. hahahahahahahaha