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Politics

Obamacare Payroll Tax Hike: More Punishment for Small-Business Success

April 7, 2013 - 6:00pm

One of the many Obamacare taxes targeting successful small-business owners is a nearly 1 percent increase in the Medicare payroll tax, which experts say will further slow economic growth and deter job creation.

"If you have $250,000 in household income, or if you are self-employed, the bill targets you to pay for $86.8 billion worth of the costs of [Obamacare], Bill Herrle, Florida executive director for the National Federation of Independent Business (NFIB), tells Sunshine State News, referring to the total amount the federal government is expected to rake in from the tax by 2020.

Before Jan. 1, employers and employees each paid a 1.45 percent tax (among others), for a combined total of 2.9 percent on income to cover the cost of Medicare, with the self-employed paying the full amount. With the new year, families making more than $250,000 annually and single persons making more than $200,000 will pay an extra 0.9 percent for a total of 3.8 percent on any income above those thresholds.


The higher tax rate on wages and salaries will cause workers to cut back on their hours, which will slow economic growth, Curtis Dubay, senior tax policy analyst for the Heritage Foundation, wrote in a June 2012 analysis. It will also deter job creation at small businesses.

Worst of all, Dubay wrote, the Democrats' controversial health care law uses the revenue raised from these increases to fund new spending created by Obamacare, even though the tax was originally enacted by Congress for the purpose of funding Medicare.

This breaks another long-held precedent that the revenue that payroll taxes raise goes only to programs that Congress created the taxes to fund.

Reach Eric Giunta at egiunta@sunshinestatenews.com or at (954) 235-9116.

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