Obamacare Could Make Tax-Filing Season Devastating for Obama

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Obamacare could make the coming tax filing season devastating for the administration. When W-2s start arriving, they are not only going to remind "the wealthy" of how much more they are paying to the government, but also those who saw their payroll taxes return to their full level. Together, these higher tax payments threaten to act like the hammer hitting the anvil that Obamacare has become for the White House.

The opening of the tax filing season on 1/31 could not come at a worse time for Obama. With the midterm elections just nine months away and the fumbled rollout of Obamacare still dominating public opinion, the last thing the White House needs is more bad news that hits a broad swath of Americans in the wallet. Yet that is just what they are about to get.

Last year, with much emphasis by the administration, a host of tax hikes hit those unlucky enough to be deemed "wealthy." Much less mentioned was the two percentage point increase in payroll taxes, resulting from the expiration of the reduction that had existed during the previous two years.

While this may seem like a lesson in ancient history, last year's tax burden is this year's tax bill, due on April 15. The arrival of W-2s in 2014 will bring a fresh reminder of 2013's higher tax reality - plus its total annual impact. Nor will it just be a reminder: for those who have not had enough withheld, there will be checks to be written as well.

Tax season is rarely pleasant, but it could be particularly unpleasant this year, because it comes in addition to the added costs many Americans are starting to feel from Obamacare.

That could make this double whammy especially hard on the administration come November's election season - less than seven months after the tax filing deadline. This White House already has a bad track record with midterm elections, having lost six Senate seats and 63 House seats in 2010's. And parties holding the White House historically do poorly in an administration's second midterm.

Obama was relatively more popular in 2010 too. Now he is enduring a prolonged hit from Obamacare, which shows no sign of going away. A recent Quinnipiac nationwide poll (released 1/22, of 1,933 registered voters, MOE of +/- 2.2%) shows the damage done. Obama had a markedly negative approval rating on the handling of: his job as president (40%-54%), the economy (39%-56%), and even foreign policy (40%-49%). However, his negative rating on health care (36%-59%) outstripped them all.

Obamacare also remains the most dangerous for the White House for two more reasons. First, it is the one entirely associated with this administration. Second, because of its direct impact: widespread and in the wallet.

Those most aggrieved with Obamacare are also those most likely to be feeling the bite of last year's higher taxes - and like Obamacare, they are feeling it directly. Again, the Quinnipiac poll data tells the story. Those making $50,000 to $100,000 rated Obamacare negatively 39%-57% and those making over $100,000 negatively 41%-57% - both above the 38%-52% negative view of Obamacare by those making less than $50,000.

Certainly, some will dismiss the threat of this year's tax bill, resulting from last year's tax hikes, as old news. However in doing so, they are ignoring a phenomenon frequently seen in other life examples: Sticker Shock.

Yes, individuals have been paying these higher taxes for a year, but they have been doing so paycheck to paycheck. The full amount has not been tallied and pushed under their collective nose in a W-2, 1040 form, and potentially as a check written to the government.

The tax bill and Obamacare double-play, coming with a midterm election fast approaching and the economy continuing to limp along - now in its fifth year since the recession ended - are ill-timed to say the least. They constitute the hardest blow on the toughest surface at the weakest time for the administration.

The adage is: Strike while the iron is hot. Right now the White House finds the fallout of Obamacare has made the iron plenty hot and the strike of a higher tax bill is coming.


J.T. Young served in the Treasury Department and the Office of Management and Budget from 2001 to 2004, and as a congressional staff member from 1987 to 2000. 

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