Sunday, March 31, 2013
ObamaCare attacks low income earners
One of his tax increases will hit only low income earners and leave rich people, like the Obamas, unaffected. It's a well-known tax threshold that has been tweaked by the Affordable Care Act, namely the medical expense deduction floor.
Up to the end of 2012, anyone who had allowable medical expenses, including co-pays, deductibles, other uninsured expenses, and health and long-term care insurance premiums, could deduct the portion of those expenses that exceeded 7.5% of adjusted gross income (AGI). Simply put, if your AGI was $50,000, then medical expenses in excess of $3,750 would be deductible. That is, $5,000 of medical expenses would yield a deduction of $1,250.
In Massachusetts, this is the only expense from Schedule A, Itemized Deductions, that is also allowed on the state income tax return.
Starting in 2013 (and in 2017 for people 65 and older), the Affordable Care Act raises this threshold to 10%. In the example above, the $1,250 deduction would vanish.
Who is this going to hurt? The Obamas? Of course not. This change will only affect lower wage earners who have high medical expenses. Serious medical conditions are often the reason for both, inability to work and frequent doctor visits and hospitalizations. This is the worst example of the rich riding on the backs of the poor that has slipped into law in years.
Most people will not learn of this attack on low income earners until they visit their tax preparers next year only to find out that they are the target of ObamaCare at a time when they are most vulnerable.
Congress needs to address this issue before the end of this year.