The Sons of Liberty—the group that rallied against the Tea Act by throwing the infamous Boston Tea Party—would be sorely disappointed to see that not only are Americans today paying a tax on tea, but on everything from their bloomers to their waistcoats to their wages as well! Or, in today’s speak: We pay taxes on everything from our underwear to our outerwear to our incomes.
While the colonists may have foreseen a tax on clothing items, I do not think they would have, in their wildest dreams, imagined a country in which hard-working Americans got paid only to have to pay a percentage back—and not just a small percentage, but an increasingly large percentage. If you are even remotely middle class, you know what I’m talking about.
In 2012, two laws were passed that would ultimately mandate higher income taxes for top earners: The American Taxpayer Relief Act of 2012 and the Affordable Care Act of 2010. Both were officially signed into law on January 2, 2013. These laws raised the federal income tax rate to 39.6 percent for the following two groups:
· Couples who earned a combined adjusted gross income (AGI) of $450,000
· And individuals who earned an AGI of $400,000
That’s just the tip of the iceberg, though. The laws also made it so that any couple with an AGI of over $300,000—and any unmarried persons with an AGI of over $250,000—will begin to see their itemized deductions and personal exemptions phased out.
For individuals who earn $200,000 a year and couples who earn $250,000, you can expect to see a .9 percent payroll tax added to your paycheck. What is this tax for? To pay for the Affordable Care Act and Medicaid. You can also expect a 3.8 percent tax to cover any unearned income you might be collecting on the side.
What You Can Do
Aside from tax evasion or earning less, there aren’t a whole lot of immediate solutions to ease your tax burden. But that doesn’t mean there aren’t ANY solutions. You can start contributing to a tax-deferred 401(k) account, or an individual retirement account. Both of these options will shrink your taxable income considerably.
Another option is to open a health savings account (HSA). This would be an especially wise option now that Obamacare is in effect, as you can not only reduce your taxable income and save money for retirement, but you can meet all of the ACA’s stringent requirements without paying an outrageous premium on health coverage—coverage that doesn’t even offer everything you need. It’s a win-win-win situation all around.
At HSA for America, we want to help you make sense of your finances by providing you with solutions that help you keep your money where it belongs—in your pocket. Let us help you set up your HSA today, and ease the burden of ever-rising income taxes—give us a call at 866-749-2039 or visit http://www.hsaforamerica.com/how-to-guide.htm.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.