Wednesday, April 7, 2010

Gubernatorial Candidate Neumann Throws a Small Health Care Tax Deduction Bone to Voters, While Seeking Obamacare Exemption.

Republican Mark Neumann must think we're stupid. His plan is to throw a health care bone to angry voters so he'll get their vote in November.

What will this governor candidate do once his delusional party "repeals and reforms" Obamacare?

If Neumann has his way, he'll give you a "deduction" for anything you pay over and above the employers contribution, plus 10 percent. A deduction is nothing compared to a tax credit, as explained below. But don't drop to your knees and thank Neumann for saving you money just yet. If $30 to $200 will be enough to buy your vote, let me know. That's nothing compared to health care reforms subsidy for average working class Americans.

Below, Mike Gousha (goo-shay) quiz's Neumann on his cock-eyed plan. Neumann whines big business will no longer get a double dip tax deduction on a TAXPAYER subsidy, our money.

Neumann insists allowing businesses the chance to deduct 110 percent of there health care costs will make Wisconsin look great for business. But as Neumann knows, businesses can already deduct 100 percent of their health insurance costs. Throwing in an extra 10% deduction is ridiculous, or as Neumann puts it, "a significant tax deduction, that will give Wisconsin an advantage when attracting jobs." "Let’s start with deductions. A deduction is an expense or an amount of money which lowers your taxable income. It is subtracted "off-the-top" from the amount of money you made throughout the year, your gross income. Once all deductions are subtracted, this amount is known as your adjusted gross income, or AGI. Tax credits, on the other hand, are dollar-for-dollar reductions which are subtracted from your tax liability. Let’s say, for instance, that you qualify for a $100 tax credit. The government is, in essence, saying to you “We are giving you credit for having already paid $100 in tax." Therefore, $100 is subtracted directly from the amount of tax that you owe. Tax credits can be more valuable than deductions, Let’s assume, for example, that you owe $1,000 in tax. For the purposes of this illustration, you are eligible for either a $1,000 tax deduction or a $1,000 tax credit. Which would you choose? Well, the deduction, when subtracted from your gross income to get your taxable income, will only decrease the tax you owe by about $10. The tax credit would be subtracted directly from the tax you owe, which would mean that you owe no tax at all." "If you're in the 25% bracket, a $1,000 deduction lowers your tax bill by $250. But a $1,000 credit lowers the bill by the full $1,000, no matter in which bracket you are."

Check out Kiplinger for more details about the business requirements with health care reform.

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