Omnibus Budget Reconciliation Act Of 1990
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The Omnibus Budget Reconciliation Act of 1990 (OBRA-90; ) is a
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
statute enacted pursuant to the budget reconciliation process to reduce the United States federal budget deficit. The Act included the
Budget Enforcement Act of 1990 The Budget Enforcement Act of 1990 (BEA) (, title XIII; ; codified as amended at scattered sections of 2 U.S.C. & ) was enacted by the United States Congress as title XIII of the Omnibus Budget Reconciliation Act of 1990, to enforce the deficit re ...
which established the "pay-as-you-go" or " PAYGO" process for discretionary spending and taxes. The Act was signed into law by
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George H. W. Bush George Herbert Walker BushSince around 2000, he has been usually called George H. W. Bush, Bush Senior, Bush 41 or Bush the Elder to distinguish him from his eldest son, George W. Bush, who served as the 43rd president from 2001 to 2009; pr ...
on November 5, 1990, counter to his
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campaign promise not to raise taxes. This became an issue in the presidential election of 1992.


Provisions

The Act increased individual income tax rates. The top statutory tax rate increased from 28% to 31%, and the individual alternative minimum tax rate increased from 21% to 24%. The capital gains rate was capped at 28%. The value of high income itemized deductions was limited: reduced by 3% times the extent to which AGI exceeds $100,000. It temporarily created the personal exemption phase out applicable to the range of taxable income between $150,000 and $275,000.
Itemized deduction Under United States tax law, itemized deductions are eligible expenses that individual taxpayers can claim on federal income tax returns and which decrease their taxable income, and is claimable in place of a standard deduction, if available. Mos ...
s were temporarily limited until 1995. The payroll tax rate increased. The cap on taxable wages for hospital insurance (Medicare) was raised from $53,400 to $125,000. Social security taxes to state and local employees was extended without other pension coverage. A supplemental 0.2% unemployment insurance surtax was imposed. The act imposed a 30% excise tax on the amount of price over $30,000 for autos, $100,000 for boats, $250,000 for airplanes, and $10,000 for furs. It also increased motor fuels taxes by 5 cents per gallon, and increased taxes on tobacco and alcoholic beverages: by 8 cents per pack of cigarettes, by $1.00 per proof gallon of liquor; by 16 cents per six-pack of beer; and by 18 cents per bottle of table wine. It extended
Airport and Airway Trust Fund The Airport and Airway Trust Fund (AATF) provides funding for the federal commitment to the aviation system of the United States of America through several aviation-related excise taxes. It was established on the books of the United States Departm ...
taxes, increasing them by 25%, and permanently extended the 3%
federal telephone excise tax The federal telephone excise tax is a statutory federal excise tax imposed under the Internal Revenue Code in the United States under on amounts paid for certain "communications services". The tax was to be imposed on the person paying for the ...
on telephone service. The Act gave states permission to create Drug Utilization Review ("DUR") boards to manage state specific drug purchasing and formulary decisions for state purchased health care such as Medicaid programs, injured workers programs, and state employee benefits. As a result, these boards (now sometimes called " Pharmacy and Therapeutics" committees), define lists of drugs classes and drugs within those classes in which no drug on the list is felt to be any more effective or less safe than another. This decision is made by a body of independent physicians and pharmacists who are not seen as having a financial conflict of interest. The Act stipulates the decision must be made in conjunction with a compilation of evidence, as well as public comment, to generate the class wide drug comparison. Once the drug makes the list, it can also be chosen as a "preferred drug". Preferred drugs are typically cheap generic drugs. The Act specified that pharmacists can substitute for a preferred drug, (if one exists in that state), and must offer counseling to the patient on the substitution. The Act also allows drugs listed as preferred to be eligible for "sealed non-transparent rebates" to occur from the manufacturer of the drug to the state agency. These are legally sanctioned kickbacks in which the public by federal law does not have a right to know the amount of the rebate below the average wholesale price (AWP). In cases where "no sufficient evidence exists" a drug is any less safe, (according to the evidence report) the drug is declared "substitutable", and eligible for placement on the PDL, and for the supplemental rebate program.


References


External links


Omnibus Budget Reconciliation Act of 1990PDFdetails
titles VI and XIII as amended in the
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br>Statute Compilations collection

Omnibus Budget Reconciliation Act of 1990 details
as enacted in the US Statutes at Large * of the 101st Congress (1989-1991) via Congress.gov {{US tax acts 1990 in economics 1990 in law 101st United States Congress George H. W. Bush administration controversies
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United States federal taxation legislation United States statutes that abrogate Supreme Court decisions