I don't want to get into politics on either side, and there are several factors:
- The first is the "doc fix". Basically, there's a 21% automatic cut in the payments to doctors in Medicare. That would lower the payouts to the point where doctors would often lose money seeing a patient, and doctors would stop seeing Medicare patents. Like with the AMT, each year congress approves a temporary fix. It is likely that, while under CBO rules the score assumes there won't be more temporary fixes, there actually will be.
- There are several areas where the bill promises unspecified future cuts. The CBO numbers takes them at their word. Consensus is that these cuts won't actually happen.
- ~$53B comes from the fact that Social Security will take in more money because more companies will pay people wages so they can buy health care on their own instead of the company paying for it. However, it doesn't count the fact that SS will have to pay out correspondingly more.
- The CBO looks at a 10-year horizon. Most of the costs are scheduled not to start immediately, but to ramp way up later.
There are a bunch of other 'hacks' in the CBO scoring to keep the cost near the promised $900bn. Both sides do it, but they discovered a bunch of new tricks this time around. It means that, going forward, CBO numbers on large bills (from both sides!) are probably worse-than-meaningless.
On the older-to-younger q, it's mostly about how community-rating is implemented.
[I posted this on the other thread, which seems to have been deleted as a dupe. Sorry if it's against protocol to re-post. But I tried to find both sides, good-and-bad wrt startups.]
While it didn't discuss all of these, it seems to me that the things that will directly impact startuppers:
Pros
- Community rating, no recision, etc will make it easier for people with pre-existing conditions to get coverage. For people who have pre-existing conditions (or who have kids who have pre-existing conditions) and don't have a spouse at a bigco and want to do startups, it makes it possible.
- Might also make it easier for bootstrappers to get coverage.
Cons:
- The new taxes are concentrated on capital gains, so will tax startups and angel investors most of all. [This bill proposes a 3.8% increase on cap gains. The administration is also planning to change the regular cap gains from 15 to 20%, so if everything passes the rate will go from 15% to 23.8%, or a 58.6% increase.]
- Shifts costs from the older to the younger, so most startups here will pay more.
- In realistic scenarios, will probably increase the deficit, affecting interest rates. But that's long-termand not clear.
Pro or con, depending on what you think:
- Mandatory coverage will require that you have coverage during a bootstrapping phase.
A mix of good and bad for startups, depending on where you are in the process.
While it didn't discuss all of these, it seems to me that the things that will directly impact startuppers:
Pros
- Community rating, etc will make it easier for people with pre-existing conditions to get coverage. For people who have pre-existing conditions and want to do startups, it makes it possible.
- Might also make it easier for bootstrappers to get coverage.
Cons:
- The new taxes are concentrated on capital gains, so will tax startups and angel investors most of all. [This bill proposes a 3.8% increase on cap gains. The administration is also planning to change the regular cap gains from 15 to 20%, so if everything passes the rate will go from 15% to 23.8%, or a 58.6% increase.]
- Shifts costs from the older to the younger, so most startups here will pay more.
- In realistic scenarios, will probably increase the deficit, affecting interest rates. But that's long-term.
A mix of good and bad for startups, depending on where you are in the process.
First, this is not a "woe is me" tale. My life is pretty good. If I do less is startups, I've done pretty well. We're very far from socialism.
This one was actually pretty simple. An acquirer filed a 1099 in the incorrect category. We submitted an amended one, but the IRS wants to tax at teh higher rate. And, with giants penalties and interest. You basically have to a) pay the amount they incorrectly claim you owe plus the interest and penalties up-front. Then beg for your money back and b) pay lawyers to try to get them to actually respond. Once the IRS has your money, it's pretty much impossible to contact them and argue. The actual form we filled out, the 843, is pretty simple.
[As an unrelated point, if you're in CA, the current cap gains rate is 15% federal + 9.3 CA income + 1% CA mental health=25.3%. If if goes to the proposed 20% federal + 3.8% medicare + 9.3% CA income + 1% CA mental mental health=34.1%, that's a 34% increase on the taxes on startups in the course of a year... Granted, I care more about the hassle, but it's made me think.]
I build startups. So far, pretty small, but I've created 16 jobs so far in my career (approximately--it's hard to track what happens to your org after acquisition). I'm proud of that.
I also angel invest. Thus far, those companies aren't that old, but my marginal contribution is worth at least several jobs.
When they make it a hassle to create startups and to invest, I spend less time building startups and more time chilling at home. When they make it more expensive, I do less angel investing. It's hard to quantify--I can't tell you how much impact it has on me personally (though it definitely has some). But when instead of looking at me individually, you look at the expected values across aggregates, economists show real, substantial effects.
And, time many, many hours I've wasted on forms, letters, arguments, etc recently are all time that could have been spent coding or with customers.
It may be because I am currently dealing with a tax error that's causing a nightmare from a previous startup, but I feel like the government keeps saying to me through all these complicated tax rules and increases, "Please don't do another startup. Please don't build things for people or create jobs. Yeah, we'll let you, but we'll make your life a huge annoyance if you try."
I like to hack and I like building things for customers, but last week I spent most of the week filling out government forms. Another 3.8% on investment income (plus the proposed 5% cap gains increase for a total of 8.8%) won't kill me, but it's starting to feel like the straw the broke the camel's back. I'll probably do the next startup. At the same time, I angel invest in 3-4 companies a year. I like to find kids who were like me at some university labs, invest in their ideas, and what them create cool companies. I may give that up.
Since this isn't a political forum, I won't say which side I'm for. But I will say that I'm angry at both sides for the $1T giveaway to the investment bankers and now to the way the CBO numbers have been gamed.
(tmp acct, b/c I don't want to discuss my tax issues under the regular acct)
- The first is the "doc fix". Basically, there's a 21% automatic cut in the payments to doctors in Medicare. That would lower the payouts to the point where doctors would often lose money seeing a patient, and doctors would stop seeing Medicare patents. Like with the AMT, each year congress approves a temporary fix. It is likely that, while under CBO rules the score assumes there won't be more temporary fixes, there actually will be.
- There are several areas where the bill promises unspecified future cuts. The CBO numbers takes them at their word. Consensus is that these cuts won't actually happen.
- ~$53B comes from the fact that Social Security will take in more money because more companies will pay people wages so they can buy health care on their own instead of the company paying for it. However, it doesn't count the fact that SS will have to pay out correspondingly more.
- The CBO looks at a 10-year horizon. Most of the costs are scheduled not to start immediately, but to ramp way up later.
There are a bunch of other 'hacks' in the CBO scoring to keep the cost near the promised $900bn. Both sides do it, but they discovered a bunch of new tricks this time around. It means that, going forward, CBO numbers on large bills (from both sides!) are probably worse-than-meaningless.
On the older-to-younger q, it's mostly about how community-rating is implemented.