Baucus Healthcare reform bill may take away tax deductions from the middle class

  Under current tax law people are allowed to deduct medical expenses that are not covered under their healthcare insurance on their taxes if the expenses are at least 7.5% of their income.

  Here is some of the deductions allowed by the IRS:

expenses such as surgeries, chemotherapy, wheelchairs, and guide dogs for the blind can be deducted, ensuring that people who need these treatments are not taxed on the income they use to pay for them.
 
“Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or treatment affecting any structure or function of the body,” according to the IRS Web site. “The cost of drugs is deductible only for drugs that require a prescription, except for insulin.” 
 
“The cost of items such as false teeth, prescription eyeglasses or contact lenses, laser eye surgery, hearing aids, crutches, wheelchairs, and guide dogs for the blind or deaf are deductible medical expenses,” says the IRS.

Other treatments and expenses that are eligible for deduction, according to the IRS, are:
 
— Wheelchair ramps
 
— Ambulance fees
 
— Braille books and other reading materials for the blind
 
— Prosthetic limbs
 
— Special education for the blind, deaf, or mentally disabled
 
— Organ donation surgery
 
— Lifetime care for the permanently disabled

 

  But that could change if the Baucus healthcare reform bill ever becomes law. The Baucus bill would not allow medical expenses to be deductible until the cost reaches 10% of a person’s income.

  It is estimated that this one change could affect 6 million Americans who currently claim medical expenses on their tax returns. This amounts to a tax increase on the middle class.

The revenue from these taxes is intended partly to offset premium subsidies for households with incomes below four times the FPL, but these taxes would be imposed on Americans who need medical devices or prescription drugs, have high out-of-pocket costs, or pay their own health insurance premiums

  In effect the Baucus bill will raise taxes on the people who use their healthcare insurance the most because they have chronic illnesses and diseases to pay for the healthcare insurance on people who may be much more healthy than those who will see the tax increase.

In effect, the Baucus proposal would tax the sick to subsidize insurance for the healthy, and many of the taxes would be imposed on the same people ‘helped’ by the subsidies

  Raising the medical expenses deduction from 7.5% to 10% is a clever little way of raising taxes on the middle class without appearing to raise taxes on the middle class, people will not be paying more taxes out-of-pocket, they will just be getting a smaller income tax return. This is a hidden tax and Baucus just hopes that people don’t even realize why their tax return is smaller.

  But there is another clever little aspect to this tax increase and that has to do with the timing; the medical expenses deduction will not go into effect until January 1st 2013, after the election.

The proposal is effective for taxable years beginning after December 31, 2012

  Just in case the American people do realize that the change in the medical expenses deduction is a tax increase, and thereby a broken promise by President Obama, the change will not go into effect until after the next presidential election.

  How convenient.