Obamacare repeal = huge tax cut for America’s wealthiest

Since one of my regular commenters who is normally pretty up on things missed this point, I figured it was worth emphasizing.  Not to mention, I’ve seen a few good posts elsewhere on the matter.  Jordan Weissman’s take captures the dynamic nicely:

Obamacare is a complicated law with lots of interlocking parts that make it tricky to understand. But one of the core, very simple things it did was raise taxes on the wealthy in order to fund subsidized health care for more Americans. Couples earning more than $250,000 saw a 0.9 percent increase in their top Medicare tax rate, as well as a new, 3.8 percent Mediare surtax on investment income.

If Republicans have their way and successfully repeal the Affordable Care Act, those two taxes will be toast—which will mean a substantial break for some of the country’s wealthiest families. The liberal Center on Budget and Policy Priorities estimates that millionaires would see 80 percent of the benefits from those tax reductions. Based on the most recent IRS data, the think tank roughly projects that the 400 highest income households—which earned an average of more than $300 million each in 2014—would see a $2.8 billion annual tax cut, worth about $7 million on average per filer. To put that in some perspective, that’s a smidge more than Obamacare is set to spend on insurance premium tax credits in the 20 smallest states and the District of Columbia…

Republicans cutting benefits for the working class and poor in order to fund tax cuts for the wealthy is a dog bites man story if there ever was one. But by repealing Obamacare’s sources of funding, the GOP is putting itself in a little bit of a bind. After all, any viable Republican replacement plan—should one actually ever come into existence, as promised—is going to presumably require some funding. Once Congress has dumped the Affordable Care Act’s taxes into the dustbin of fiscal history, however, a lot of Republicans may be nervous about raising taxes to fund their own proposal. What happens at that point? Your guess is good as mine.

Weissman is right, this is dog bites man.  But this is a really big dog with strong set of teeth.  And, it’s one of the reasons Republican politicians hate Obamacare– a core feature is a clear redistribution of wealth from America’s wealthiest to the poor and middle class.

About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

4 Responses to Obamacare repeal = huge tax cut for America’s wealthiest

  1. rgbact says:

    well, thanks for laying out the specifics at least. Yes, ACA has many taxes. the one you’ve cited is the most progressive. Others aren’t. like the individual mandate and the Cadillac tax. The reality is even uninsureds don’t like ACA. The vast majority think ACA has hurt them, rather than helped. Taxing rich people just doesn’t cut it for them, I guess.

    FTR, i oppose a repeal of the exchanges and think Republicans have way overpromised. But we’ll see what shakes out in the upcoming sausage making…Evidently, they can only repeal things that don’t impact the budget, under reconciliation rules.

    • rgbact says:

      correction……;they can only repeal things that DO impact the budget.

    • Jon K says:

      The individual mandate is how things like guaranteed coverage to everyone regardless of preexisting conditions is made possible. Since at some point everyone is going to need to use healthcare, doesn’t it make sense to require everyone to participate in the system? I fail to see how anyone is hurt by the individual mandate. If we do away with it than preexisting conditions cannot be covered. An insurance market where it is possible to wait until you are sick to buy coverage will collapse. Healthy people are necessary for health insurance to work. The healthy subsidize the sick. What about that bothers you so much?

  2. R. Jenrette says:

    Since repealing Obamacare will require cutting Medicare benefits, will we see angry seniors verbally abusing Republican Congress members and marching in the streets?
    I certainly hope so. You’ve done it before, seniors!

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