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SUMMER 2017

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Distributor's Link Magazine Spring Issue 2017 / Vol 40 No3

42 THE DISTRIBUTOR’S

42 THE DISTRIBUTOR’S LINK Bart Basi Dr. Bart A. Basi is an expert on closely-held enterprises. He is an attorney, a Certified Public Accountant, and President of The Center for Financial, Legal & Tax Planning, Inc. He is a member of the American Bar Association’s Tax Committee on Closely-Held Businesses. THE POTENTIAL TAX EFFECTS OF THE AMERICAN HEALTH CARE PLAN 115th Congress - 1st Session - H.R. 1628 It is important as business leaders and owners across the country that we understand some of the tax effects of the proposed legislation known as the American Health Care Act (AHCA). The bill has been passed by the House on May 4th, 2017. It will likely not be enacted by the Senate in its current form unless there is a shift in the views of elected officials on health care policy. This type of legislation goes substantially beyond providing adequate health care across the country and has far reaching tax implications. With that said, we do not take a position on the bill, but we are taking this opportunity to share with everyone what we know about the effect on taxes this bill could have, if enacted. As of May 8th, 2017, the Senate has implied they are going to write an entirely different bill 1 . Many senators are up for reelection next year and if the reaction to the House bill is any indicator of how the public will react, they will most likely create something different. Individual and Employer Penalties - Under the Patient Protection and Affordable Care Act (commonly referred to as the ACA or Obamacare) there is a requirement for individuals to be insured under a health insurance contract 2 . That is the law of the land right now. Employers are also under obligation if they have 50 or CONTRIBUTOR ARTICLE more employees to provide them with affordable health insurance 3 . Under the AHCA, these obligations would be dropped and the requirement/penalty would be unapplied retroactively to January 1, 2016. Net Investment Income Tax (NIIT) - This 3.8% tax applies to capital gains and other investment gains if the taxpayer has an income of over 0,000. Under the new bill, this tax would no longer apply 4 . The policy position is to encourage investment. It is likely that further reduction will happen in the capital gains tax as well. This would become effective January 1, 2018. Additional Medicare Tax - Similar in nature to the NIIT, this is a 0.9% tax, it would also be repealed as of January 1, 2018 5 . Excise Tax on High Dollar Health Plans - These plans are plans that exceed ,800 for individuals and ,500 for families. The tax would be paid by the insurers themselves, not the individuals. It was not due to be in place until 2020, under the AHCA that would be delayed until 2025. Medicaid - The Medicaid expansion has been repealed 6 . Medicaid will only be available under limited circumstances. The circumstances include where a family is under 100% of the poverty level. Under the ACA, the level is 138% of poverty. CONTINUED ON PAGE 114

THE DISTRIBUTOR’S LINK 43 Earnest Machine was recently recognized as an organization that has demonstrated cutting edge practices with the Smart Culture Award from Smart Business magazine. Earnest was one of 28 Northeast Ohio organizations honored by Smart Business for using company culture as a competitive advantage. According to Kirk Zehnder, president of Earnest Machine, the company prides itself on living its core values, which drive everyone to be great at their jobs. Those values include: ¤ We do what we say we will do. ¤ We put the customer first in our decision making process. ¤ We respect our customers, suppliers and one another. ¤ We embrace change. And while those values define how the company operates, Zehnder noted that Earnest Machine puts a concerted effort into company culture because happy employees lead to happy customers. For more details on Earnest Machine’s Smart Culture Award, check out Smart Business Online. For more information about Earnest Machine’s products and services, contact them by telephone at 1-800-327- 6378 or visit them online at: www.earnestmachine.com.

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