Several pages of the American Health Care Act repeal a few taxes and even a deduction. Unfortunately, only a couple of them will directly affect the American consumer. If the bill passes, we can say buh-bye to the so-called “Tanning Tax.” The 10% tax is paid by the person who actually hops inside the tanning bed. The 3.8% Investment Income Tax will go away as well. According to businessinsider.com, just over 40% of Americans are invested in the stock market, but it really depends on how much each person holds in stock as to whether or not they really feel a boost. As with all of the other repeals discussed in this post, these taxes will end December 31, 2017.
The IRS code does not allow health insurance companies to deduct pay paid to an employee that goes over $500k. There are a few exceptions but now this won’t be a problem. They can pay a CEO a buttload of money and deduct it as a payroll expense. In case you are wondering, buttload is a technical term…
Now that we can all legitimately use “buttload,” let’s get back to all of the fun money that companies will be saving after 2017!
Prescription drug makers and importers will no longer be paying the special tax imposed upon them. Could this lead to lower prescription drug costs? We can only hope.
And finally, health insurance companies pay another tax that has to do with how much they collect in monthly premiums. The tax was suspended for this year and if this bill makes it through without changing this, the tax will formally end at the end of the year.
These tax cuts could be a positive thing, as long as they translate to lower costs to the consumer. I’ll be honest, I’m not entirely sure why the Investment Income Tax is addressed in health care legislation, but random stuff happens like this all the time.Perhaps you could argue that the tax that would have been paid could be used to pay monthly insurance premiums but I just don’t see Americans who need help the most carrying a stock portfolio that makes that kind of money. But, I’ve been wrong before.
‘Til tomorrow, when I will bring you another buttload of information!