50+ Lifestyles

What Happened January 1, 2014??

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Here is what happened since January 1, 2014. Did you notice?

Most have not noticed these changes yet. But these changes will eventually hit! Then we will really notice, and by that time what a jolt! Here are the happenings:

• Top Income tax bracket went from 35 percent to 39.6 percent
• Top Income payroll tax went from 37.4 percent to 52.2 percent
• Capital Gains tax went from 15 percent to 28 percent ……based on tax rate……above 15 percent tax bracket….below 39 percent rate stays at 15 percent, but to 20 percent for 39 percent brackets AND 28 percent on collectibles.
• Dividends tax went from 15 percent to 39.6 percent
• Estate tax went from 0 percent to 55 percent

All these taxes were passed under the Affordable Care Act. Remember the famous quote by one of our illustrious Congressional representatives….”We have to pass this law to see what’s in it.” We are finding out, ohhhhhh but gradually finding out, what is in this massive piece of legislation that is now law since 2010 with a gradual phase-in over the years. 2014 is a huge phase-in year.

Now that the initial enrollment period is history, media reports and President Obama’s administration triumphantly report over 7 million new enrollees in some form of Obamacare.

I am not a tax preparer or accountant but as an insurance agent and financial guy, I have mixed emotions about this law. Many more people have major medical insurance than prior to this law. That’s a good thing – more people insured. Further the law has mandated not only participation but also mandates a huge improvement in benefits; no more pre-existing conditions, no more limits in benefits and above all guaranteed acceptance. All of these mandated benefits are welcomed by consumers. On the other side of the coin, the cost of major medical insurance is going to escalate and escalate substantially.

But wait – the Affordable Care Act (law) says there is also a benefit called “premium subsidy,” designed to help pay the premium for major medical insurance. More people – over 7 million – now have major medical insurance that previously had none. That could be a huge benefit, too. But wait further and let’s analyze what is happening…….more people insured under Affordable Care means more government spending, not only for premium subsidy, but also for the terrific increase in government employees in each state to implement the law. There is an insurance exchange staffed in each participating state by new government employees. New government workforce brings salaries, benefits, pensions, and cost of maintaining a work center. Hey folks – who do we think is paying for this huge government extended expansion and corresponding cost?

Taxes, taxes, taxes – that’s what’s happened since January 1. Phase-in of the Affordable Care Act cost reflected in our taxes is going to haunt us for a long period of time. What can we do? Opposition to the law is becoming less and less all the time. Affordable Care Act remains the law of the land. We will eventually appreciate the actual cost of this law when the increased taxation hits each and everyone of us. There are alternatives. There are choices with taxable income. See our ad below.