Walking the Obamacare plank

With Obama's re-election and a split Congress, Obamacare is now the law of the land and there is no chance of repeal.  Companies like Papa John's have already courted criticism for announcing they will lay off workers and/or cut workers' hours in response to the tax increases Obamacare will bring in 2013.  Many other business are or will be following suit.  

According to a list of of new 2013 taxes compiled by Americans for Tax Reform, the new taxes will include:

Investment Surcharge - What this has to do with healthcare has not been explained, but it will apply a 3.8% increase to capital gains and dividends for households making over $250,000.  This hits small business disproportionately hard as many small business owners fall in this category, and I'm not talking about Donald Trump. 

"Special Needs" Tax - Caps the amount that can be saved in Flexible Spending Accounts at $2500 per year.  It is called the "Special Needs" tax because it particularly hurts families with special needs children as they spend proportionally more on health care and tuition for special education.  

Medical Device Manufacturers Tax - A 2.3% excise tax on medical devices worth more than $100.  An excise tax is one that is imposed on a manufacture of goods rather than on the consumption of that item.  It is a "hidden" tax as most people don't see the tax, only an increase in costs.  This has already hit the devices industry hard and multiple employers have announced layoffs. 

Medical Spending Deductions Cap - The new tax increases the threshold for the amount of medical spending above which the spending can be deducted from 7.5% of their income to 10% of their income.  People with ongoing medical expenses that fall under the threshold can no longer file for the deduction, and people with higher expenses lose out on 2.5% of what they had previously been able to deduct.  

Medicare Payroll Tax - Employers already pay an existing payroll tax for each employee.  The rate employers must pay will increase.  With raises and bonuses already squeezed by the stagnant economy, employers will be even less able to offer raises when the cost of affected employee goes up. 

How is the economy supposed to recover when the cost of doing business increases like this?  Small businesses employing 49 people or fewer will be incentivized NOT to hire that 50th person as they will then fall under the Obamacare provisions.  And keep in mind penalty calculations for lack of compliance for companies with more than 50 employees are made using the number of full-time staff; part-time employees are not included.  This effectively incentivizes companies to maximize the number of employees working 30 hrs a week or fewer.  Underemployment is already a significant problem right now and Obamacare disincentives will make the situation even worse.  We've just seen the tip of the iceberg. 

These taxes will go into effect no matter what the results of the "Fiscal Cliff" negotiations are, as they are not part of the Bush era tax cuts, and the ones I've discussed above are only those slated to go into effect in 2013.  There is another set that will take effect in 2014 and 2015.  It appears that the last nail has ben driven into the coffin holding any hopes we may have had of reversing the economic downturn any time soon.