Obama Tax Hikes will hit Retirees, Middle Class, Veterans, Medicare…

Associated Press
September 19, 2011

WASHINGTON (AP) — It’s not just millionaires who’d pay more under President Barack Obama’s latest plan to combat the deficit.

Air travelers, federal workers, military retirees, wealthier Medicare beneficiaries and people taking out new mortgages are among those who would pay more than $130 billion in government revenues raised through new or increased fees.

Airline passengers would see their federal security fees double from $5 to $10 for a nonstop round-trip flight and triple to $15 by 2017, raising $25 billion over the coming decade. Federal workers would face an additional 1.2 percentage point deduction from their paychecks to contribute $21 billion more for their pensions over the same period. Military retirees would pay a $200 fee upon turning 65 to have the government pay their out-of-pocket Medicare expenses. They’d also pay more for non-generic prescription drugs.

And it’ll cost corporate jet owners a new $100 fee for each flight.

The fees aren’t taxes. They’re charged to people who use government services or receive benefits such as taxpayer-subsidized health care, and they typically defray the government’s cost of providing a service. The fee on corporate jets and other private passenger planes, for example, would raise about $1 billion a year to help finance the cost of air traffic control. Recreational flyers won’t have to pay.

Many of Obama’s proposals are retreads from earlier budget proposals, including those submitted by his predecessors. Most have been rejected year after year. Some ideas, like requiring wealthier veterans to pay more for their health care, stir up opposition from powerful interest groups. Others, like the bigger security fee for flyers, seem too close to a ticket tax increase.

Administration budget documents describe the fees as savings.

But unlike Obama’s tax proposals, the new fees aren’t necessarily dead on arrival with Republicans. A group led by Vice President Joe Biden had tentatively agreed to increase the airline security fee before talks between the White House and Congress collapsed in June. The Biden-led group was also weighing an increase in pension contributions by federal workers, an idea that has riled organized labor and other Democratic-friendly interest groups.

“Why (would) the administration … propose a Social Security payroll tax holiday in its jobs bill, but simultaneously suggest a tax increase for middle-class federal workers?” asked Joseph Beaudoin, president of the National Active and Retired Federal Employees Association.

Another new fee would increase by one-tenth of a percentage point the fee that mortgage giants Fannie Mae and Freddie Mac charge lenders to guarantee repayment of new mortgage loans. The administration says the fee increase would add $15 a month to the monthly cost of an average new mortgage. Even without existing mortgages being affected, the fee increase would raise $28 billion over 10 years.

Some of the fees tilt toward the arcane. There’s a plan to save $3 million a year by developing an electronic records system for hazardous waste shipments. Another would produce $7 million more a year by giving the federal government a 50 percent share of receipts from geothermal leases on federal lands instead of 25 percent, with the remainder going to the states.

Another proposal would charge $4 an acre on non-producing oil and gas leases on federal lands, raising $1 billion over a decade. The idea is to prod energy companies to get their leases into production or give them up and allow others to develop them.