Barack Obama’s promise to “spread the wealth around” was a rare unscripted moment in the campaign in the fall of 2008.  The mask of “hope and change” was ripped off for just a brief moment to Joe Wurzelbacher of Holland, Ohio and Senator McCain capitalized.

Sadly, the core liberal media establishment attacked Mr. Wurzelbacher instead of Mr. Obama and explored Mr. Wurzelbacher’s background, finding a tax lien and exploring the details of his business.  The statement made by a candidate for President that indicated that he was interested in wealth redistribution on a massive scale was mainly ignored.

We are now reaping the whirlwind.  The health care bill passed last night (Sunday evening at 11PM) includes wealth redistribution on a massive scale.  Ryan Donmoyer at Bloomberg news has the gory details:

Higher Medicare Taxes

Most of the revenue would come from higher Medicare taxes on about 1 million individuals earning more than $200,000 and about 4 million couples filing jointly who make more than $250,000.  

The legislation would for the first time apply Medicare taxes to investment income received by these households beginning in 2013. The 3.8 percent rate would apply to unearned income such as realized capital gains, dividends, interest, rents, and royalties. It wouldn’t apply to other income subject to income taxes, including interest from municipal bonds and retirement accounts such as 401(k) plans until funds are withdrawn.  

Obama’s budget proposes to allow the existing 15 percent tax rate on dividends and capital gains to rise to 20 percent in 2011 for the same high-earners. Layering a 3.8 percent Medicare tax on top of that would mean a new top rate on dividends and capital gains of 23.8 percent. The top tax rates on interest and rental income would rise to as high as about 44 percent, assuming other Obama tax increases on high-earners are enacted.  

The bill also increases the individual’s share of Medicare tax currently imposed on salaries starting at $200,000 for individuals and $250,000 for couples to 2.35 percent, from 1.45 percent currently.  

Cost to Couples

The combination of the new Medicare taxes and Obama’s budget proposals, if they were in place this year, would cost a married couple with a household income of $5 million an extra $287,100 in taxes, according to analysis by the consulting firm Deloitte Tax in Washington.  

The Medicare taxes superseded an earlier Senate proposal to tax high-value employer-provided insurance coverage, dubbed “Cadillac plans.” That 40 percent excise tax was delayed until 2018, when it would begin to apply to benefits over $10,200 for individuals and $27,500 for couples.  

Those thresholds would be indexed to inflation, which grows at a slower pace than the cost of health care, meaning more employers would likely face the levy over time.  

Other provisions likely to affect higher-income individuals would scale back tax preferences associated with paying out-of- pocket medical expenses. Starting in 2013, Americans under 65 won’t be able to deduct medical expenses until they exceed 10 percent of income, up from 7.5 percent now; retirees would keep the lower threshold.  

Savings Accounts

The bill in 2011 places new restrictions on what can be purchased using special savings accounts funded with pre-tax dollars including health savings accounts. Improper withdrawals from the accounts also would be hit with a new 20 percent tax.  

And the legislation for the first time would place a $2,500 limit on what can be contributed to employer-sponsored flexible spending accounts, another type of account funded with pre-tax dollars that can be used to pay for medicines, co-payments, and other expenses.  

Employers currently set their own limits, typically between $3,000 and $5,000 in the absence of a government cap. This change would cost an average worker about $625 in tax savings, according to WageWorks Inc., a San Mateo, California, company that administers 1.5 million accounts.

Senator McCain’s claims that Mr. Obama intended to engage in class warfare and thought the government’s role in spreading the wealth around was socialist in nature was summarily dismissed as overreach and “scare tactics”.

Welcome to the reality of a leftist President and Congress.  This bill is just the first step.  The Bush Tax Cuts expire at the end of 2010, and that will create an entirely new tranche of tax increases. 

This will continue until we put new people in the seats to fight back against the leftist social and fiscal agenda…

Chris is an attorney working in the private sector in New York City.