Health Care

I thought this was an interesting and informative article:

Help! I've Been Taxed and I Can't Get Up
By Jeff Clark
Mar 24 2010 4:17PM
www.caseyresearch.com

Like many of you, the passage of the healthcare bill wasn’t met with the popping of champagne in my house. I found myself chanting “Uncle Sam, Uncle Sham” as the day wore on. Higher taxes and other major changes are headed our way. And yet, I think there’s something in the bill that’s even more dastardly.

If you’re a supporter of the bill, you’d point to its benefits: Poor adults will get Medicaid. Low-income families will get federal subsidies to buy insurance. Small businesses may get tax credits. Kids will be able to stay on the parents’ policy until they turn 26. Seniors get additional prescription drug coverage. People with pre-existing medical conditions can’t be denied or dropped.

While no one is really against any of those things, the elephant in the room (or boa constrictor in the bed) is how those things are going to be paid for. Here’s how: the “wealthy” will pay higher taxes; businesses with 50 or more employees will have to insure them or pay a penalty; individuals will have to pay a fine if they don't buy insurance; premiums will rise for many who already have insurance; and seniors with Medicare Advantage policies could lose those plans or pay more to keep them.

Regardless of how you feel about the bill, the fact is that taxes are going up, and not necessarily just on the “wealthy.” The healthcare plan will cost $940 billion over the next decade, almost $100 billion a year.

I haven’t read the 2,407-page bill (almost twice as long as the Gutenberg Bible), but there are plenty now who have. Here’s a summary I compiled, from various sources, that outlines the tax ramifications of what is now the law of the land.

Assuming the Senate passes the package of changes, the biggest tax increases will be in Medicare payroll taxes. Those take two forms, both starting in 2013:
Singles earning more than $200,000 and couples earning $250,000 will pay 0.9% more on wages and self-employment income.

All investment earnings will be taxed an additional 3.8%. This includes capital gains, dividends, and interest, the first time in history the Medicare tax is applied to them.
But keep in mind that the Bush tax cuts expire at the end of this year, which will push the Medicare tax on capital gains to 23.8% in 2013 on these earners. Dividends, currently taxed at the top rate of 15%, will be taxed as ordinary income, with the top rate scheduled to rise to 39.6% (from 35%).

This means that the tax on dividends could go as high as 43.4% when the new Medicare tax goes into effect in 2013. (Obama has proposed a top dividend tax rate of 20%, so if Congress enacts his proposal, the top tax rate for dividends would “only” rise to the 23.8% level in 2013.)
You may think you’ll escape this tax if you’re not “rich.” But it’s those darn Unintended Consequences politicians never seem to think about that could still sting you. For example, the 3.8% Medicare surtax could snag you if you happen to sell some real estate for a big gain.
The other major tax increase is the one imposed on health insurance plans that are more generous, the so-called “Cadillac” health plans. And this tax increase doesn’t just apply to high-income earners; those state and union workers that lobbied for better health coverage instead of big pay increases are going to find they’re included with the “rich” in a new excise tax. Starting in 2018, family insurance plans valued at more than $27,500 ($10,200 for individuals) would pay a 40% tax above that level.

Ouch.

And there’s other ways you’ll be taxed, particularly through the magic of “passing it on to the consumer.”

For example, pharmaceutical manufacturers will pay an annual fee based on their market share starting in 2011; same for health insurers, starting in 2014. A 2.3% excise tax on the sale of medical devices will start in 2013. A 10% excise tax on indoor tanning services goes into effect this July.

How will all these businesses afford the additional tax? They won’t. You’ll pay it, through higher prices.

Further, were you one of those who incurred medical expenses above 7.5% of your income, thus allowing you to deduct them? That ceiling will be 10% starting in 2013. (It remains 7.5% for those over 65.)

There’s more, most of it in the form of greater restrictions, increased penalties, and higher fines on various entities, businesses, health plans, or individuals. But what I especially cringed at was this: the bill vastly expands the responsibilities of, and gives greater strength to, the IRS. The agency will hire as many as 16,500 additional auditors, agents, and other employees just to enforce all the new taxes and penalties.

Specifically, the bill will empower the IRS to do the following: verify citizens have “acceptable” health care coverage; impose fines up to $2,085 or 2% of income (whichever is greater) for failure to purchase “minimum essential coverage”; confiscate tax refunds; and increase audits.
The upshot is that this will force many taxpayers to be more conscientious of monitoring their income and tax withholding.

Perhaps most damaging to the government’s plans is if the bill leads some to ask the Ayn Rand/Atlas Shrugged questions: What if I just stop being productive? What if I stop working once my income approaches the threshold? What if I invest less so that I stay under the limits?
And last, here’s the time bomb that could trump the tax concerns: none of these taxes are indexed to inflation. Since the bill fails to index to inflation the exemption threshold for the Medicare taxes on both earned and unearned income, it’s almost certain many taxpayers will get to these tax levels a whole lot quicker than they think.

What this essentially means is there is now more incentive on the part of the government that we have inflation. If inflation reaches 10% at some point, which is below the 14%+ rate it hit in 1980 and far below any hyperinflationary level that’s possible, the $100,000 earner gets to the magical $200,000 level in seven-and-a-half years. From the government’s perspective, it makes the printing of money a lucrative affair.

Yes, higher taxes are coming. But with the government’s built-in incentive for inflation, along with the reward that comes from getting more citizens to higher tax rates, many may find the tax issue an annoying mosquito bite compared to the alligator chomp of inflation. And high inflation affects every citizen, regardless of income or tax rate. Those who think they’ve escaped the cold may find they’ve walked into a freezer.

With this added push to inflate, our investment strategy for the foreseeable future is now clear: We must invest in assets that not just keep up with inflation but outpace it.

All wise citizens do tax planning. Have you done inflation planning?

More

A few pictures I forgot to post.

The first is the tub in the master bathroom of our room. Nancy talked about it all the time, and looked forward to her baths every night. She also made me sit in the bedroom and entertain her through the little window. She's kind of weird.

The other picture is from Gatorland. That is a real boa constrictor and alligator.

Catching Up

Since it has been a while since I have blogged, I have a lot to catch you up on.

Nancy is still doing well and feeling well. No morning sickness, afternoon sickness, evening sickness, nothing. I think as easy as her pregnancy has been so far, it must mean that this kid is going to be a hellion. We go for our "big" ultrasound in 2 weeks. That is when they check out all the Jorge' anatomy and will hopefully be able to tell us for sure what the gender is. We have been doing an amateur ultrasound at the clinic every 2 weeks or so, and he/she is finally getting big enough for us to see pretty well. Still nowhere near as good a picture as they get with the high dollar machines...but it is still pretty cool to be able to check things out. That little booger does backflips every ten seconds. I really feel sorry for her once she starts feeling it.

Here is an updated baby bump pic:

Last weekend, we went on our "babymoon"...i.e. our last vacation pre-Jorge'. We went to Orlando, Florida for three days. We fit a lot into our short time there.

We went to Astros Spring Training, which is something Nancy and I have always wanted to do. We saw them play the Braves from right behind home plate and got a few autographs before the game. It was a blast, and we would love to go back sometime. Here are a few pics:

Carlos Lee



The starting lineups posted at the stadium





Hunter Pence and Carlos Lee





Wandy Rodriguez signing autographs





Hall of Fame Astros broadcaster Milo Hamilton





Former President George Bush 41, Astros GM Ed Wade, Owner Drayton McLane and Barbara Bush



We also went to an Orlando Magic basketball game, against the Charlotte Bobcats. That was a great time as well. However, while I was watching the game, Nancy was obsessed with watching the Magic Mascot. She watched him the whole game and was literally laughing out loud at his silly antics. Seriously, four year olds don't pay that much attention to the freakin' mascot.

She even took his picture. I erased the other 47 pictures she took of him. I figured one was plenty:




That was all on Sunday. On Monday, we went to Gatorland, which is like a zoo with only alligators. It was actually pretty fun.






We also went to Downtown Disney, which is kind of an outdoor mall, with a lots of restaurants, attractions, and a marina. Our nieces and nephews would have loved it. At the marina, we rented a boat. We were surprised that they will just hand the keys to a boat to just anyone with an ID. That could be dangerous. We had thought someone was going to drive us around on a lame "tour"...but nope, we got to drive. As we left the marina, we realized why they aren't too worried about letting anyone drive these boats. Our boat had a governor on it that allowed it to max out at 3, maybe 4 miles per hour. But it was fun. Our boat briefly died while we were way back in a narrow inlet with no one in sight, but after five minutes or so, we got it started back up.

Here are some pics:







We didn't go to Magic Kingdom or Universal or anything like that, since Nancy can't really ride thrill rides right now...but we had a blast.

Here is our resort and suite:






We got back on Tuesday, so it was back to work on Wednesday. It was, of course, insane. The first day back from a vacation is always interesting. It is always crazy busy because no one wants to see the relief vet, so they wait until I get back. I also get to put out all the fires that happened while I was away, get to hear about how bad the relief vet was, how many clients they pissed off, and return about 30 phone calls. That first day back always makes me wonder why I ever go anywhere.

Then today, after I got off work, we drove to Austin for Makinley's second birthday party. I can't believe she is already two years old. We had lots of food and cake, watched Baby Mak open presents, and dodged a bazillion 2-4 year old children. It was a lot of fun.

A few pictures. This first one is hilarious. It looks like Makinley is freaked out at the thought of Nancy and I kissing her on the cheek. We always love seeing all our nieces and nephews, and wish we got to see them more often.










That's about it for now. I'll blog again after we find out Jorge's gender.

Too Much Information

Yesterday, a middle-aged female client brought her dog in for a nail trim. As the technician was trimming the nails, the dog just casually dripped urine the whole time, so I went to the lobby to speak to the owner. I asked her if her dog had been having any incontinence issues. She said, "Yes, she has. She just drips constantly. She has the same problem I have, except mine is number one and number two."

That would be the very definition of TMI.

It's a...

Boy. Maybe.

Nancy went for her 16 week visit yesterday, and the doctor did an ultrasound as well. At first, she sounded very sure it was a boy. Then, as she kept looking, she gradually became less and less sure. So, by the end of the appointment, we were only slightly more sure than if we had flipped a coin. Thanks, doc.

The good news is, in only four more weeks, we should know for sure. Maybe.

I'm pretty sure Nancy's mom is going to have to embroider something between now and then. Which probably means our sweet little girl will be wearing a football shirt or a monster-truck bib.

This was her third ultrasound with the doctor, but it was her sixth overall. She has also had three at Lakeside Animal Clinic. This past Saturday, we finally got some good pictures of baby Jorge'. I had Nancy on her back, on her hands and knees, standing...you name it. Pretty much every angle possible to get a good shot. You see, my ultrasound machine is not quite as fancy as the OB/GYN's $100,000 machine. But I like it, and it serves me well in a sad, inadequate kind of way.

One thing we have quickly determined with all the ultrasounds...Jorge' is hyperactive. He does back flips and kicks his feet all the time. When Nancy starts feeling it, we are afraid she is never going to be able to sleep.

Speaking of sleep, Nancy (without my knowledge) purchased a pregnancy body pillow online. Sounds like a good idea, right? Yes, if you are Nancy. If you are Randy or Shelby, this gargantuan, overstuffed behemoth forces you to sleep with one cheek hanging off the edge of your king-size bed. This thing is seriously ridiculous. I laugh every time I see it. It is shaped like a huge question-mark. I'm assuming that it makes pregnant women sleep more comfortably by supporting their humongous belly and boobs. However, whoever invented this did not consult with husbands or bed-hogging dogs along the way.

Alright, I am off to actually do some work.

Drum Roll Please...Baby Jorge's gender is...

While waiting patiently for the 20th week ultrasound to get here so that we can hopefully find out baby Jorge's gender, we have resorted to less scientific means of trying to figure it out. The only thing we have not done is mix any household chemicals together. After reading Laura's description of Scott nearly being blown to bits by a wayward Drano explosion, we decided that is where we draw the line.

After consulting the Chinese Lunar Calendar, dangling a wedding ring (mine and Nancy's) over her belly and wrist, plugging our dates of birth into some sort of advanced calculus equation, taking a 15 question Old Wives Tales quiz, thrice having Nancy pee in a cup for the Intelligender test, and attempting to see fetal genitalia on my 1992 model portable veterinary ultrasound machine, the results are in. We are 51% sure we are having a girl.

The evidence of Jorge' being female: 3 of the 4 wedding ring tests spun in a circle, Nancy is craving fruit, 1 of the 3 Intelligender tests came up female, the Chinese calendar says female, her lady lumps could now feed Jon & Kate plus 8, her mom's hair is not gray (Nancy assures me that is her natural hair color, right Doris? We wouldn't want inaccurate results).

The evidence of Jorge' being male: Nancy craves orange juice, her leg hairs are growing more quickly (sexy!!), 2 of 3 Intelligender tests came up male, she is craving salty food, 1 of 4 wedding ring tests swung like a pendulum, and she has gained weight in her face.

So that settles it. I'll start painting the nursery pink tomorrow.

You have one new message

Actual word-for-word transcript of a message left on our clinic answering machine last night at 10:36 pm:

Uh, hi this is Meesha (no last name). Why haven't you called me back? This is Meesha (again, no last name). I came in and filled out an application, but you never called me back. I want to know when I can start, cuz I really need a job. I need to start this week, but it has already been a week and you haven't even called me back. So if you could call me tomorrow and let me know when to start, that way I can start getting paid as soon as possible. My phone number is ----- so leave me a message. Also, leave on the message how much you will pay me, because if it is not enough, I won't even come in. Also tell me when to start and what to wear. Thanks. Bye.

I have no idea who Meesha is. Shockingly, her application never made it past our receptionists. I don't know...should I hire her?