At the LIFE Foundation, we strongly advocate for self-reliance in your personal financial planning, so you need to be aware of the pending tax increases for 2013. Next year will generate 20 new or higher taxes from the Affordable Health Care Plan that will become effective for the first time on Jan. 1, 2013. Here are five of the biggies:
Medical device tax – a $20 billion tax increase: Medical device manufacturers employ 409,000 people in 12,000 plants across the country.
“Special Needs Kids Tax” – a $13 billion tax increase: The 30-35 million Americans who use a flexible spending account (FSA) at work to pay for their family’s basic medical needs will face a new government cap of $2,500.
Surtax on investment income – a $123 billion tax increase: This is a new 3.8% surtax on investment income earned in households making at least $250,000 ($200,000 for a single person).
“Haircut” for medical itemized deductions – a $15.2 billion tax increase: Currently, those Americans facing high medical expenses are allowed a deduction to the extent that those expenses exceed 7.5% of adjusted gross income.
Medicare payroll tax hike – an $86.8 billion tax increase: The Medicare payroll tax is currently 2.9% on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 in the case of married couples) will face a 3.8% rate instead.
The problem is, how do we pay for the new health care plan and reduce the national deficit at the same time? If the government could impose a 100% tax on all the earnings of every person in America earning at least $250,000 a year, how much money would it receive? The answer is $1.4 trillion.
Taking all of the profits of the Fortune 500 companies would be approximately $400 billion. All of the profits from the Fortune 500 companies would be enough to run our government for 40 days. You could take all of the earnings of all the people earning over $250,000 a year, all of the profits of the Fortune 500 and all of the wealth acquired by America’s billionaires, and that would only be enough money to fund our current federal government for eight months. If we can’t even fund an entire year of spending, how do we reduce our deficit? If this doesn’t make you uneasy about our nation’s current fiscal crisis, it should.
Why do I bring up all these taxes and the deficit? Because you need to take personal financial responsibility for your financial well-being and that of your family. You can’t rely on friends, family and the government to fill the financial gaps; but with proper planning, you can minimize the risks to yourself and your family.
Reach out to your agent or advisor today to start the process.