Since Senate Republicans released their healthcare reform bill early Thursday, the narrative from the media has been that this bill is a giant tax cut for “the rich.”
This narrative is false.
ObamaCare imposed a long list of taxes that directly hit middle class families.
The Senate’s “Better Care Reconciliation Act” (BCRA) repeals these taxes and contains a total of $701 billion in tax reductions over the next decade.
{mosads}Former President Obama promised he would not raise any form of tax on any American making less than $250,000 a year. But he shattered the promise when he signedObamaCare into law.
Many of these taxes have been used to enforce theObamaCare vision of bigger government, more regulations and rules, and fewer choices.
For instance, the individual mandate tax penalty hits a family of four with an income tax increase of $2,000. In 2014, eight million American families were hit by this tax for refusing to purchase government-approved health insurance. Most were in the middle class.
The law also imposes an income tax increase on families with high medical bills. Prior toObamaCare, a family could deduct medical costs from taxable income when these costs exceeded 7.5 percent of Adjusted Gross Income, but the law increased this to 10 percent of AGI. As a result, 10 million families with an average annual income of $53,000 pay $200 to $400 in higher income taxes every year.
ObamaCare has reduced the ability of families to save for health costs by imposing taxes on Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). Roughly 20 million households use HSAs and another 30 million use FSAs, andObamaCare imposed multiple punitive taxes on these families.
Specifically, the law prevented HSA users from using these accounts to purchase over-the counter medications, imposed a $2,500 cap on FSAs, and increased taxes on early withdrawals from HSAs. The Senate bill repeals all of these taxes and also doubles the maximum contribution limit of HSAs. This will give household budgets a huge boost.
ObamaCare’s taxes also increase the cost of healthcare for consumers.
Even as the law mandates purchase of health insurance, the law imposes a tax on health insurance. This health insurance tax hits 11 million households that purchase care through the individual insurance market, and 23 million households covered through their jobs.
The tax, which is imposed on an insurer based on their market share, has increased premiums by an estimated $5,000 over a decade. Roughly half of this $145 billion tax is paid by households earning less than $50,000 a year.
ObamaCare also imposes taxes on medical device and prescription drug manufacturers. Repeal of these taxes will reduce the cost of healthcare and make important goods and services more accessible to families.
Some ObamaCare taxes are not related to healthcare, but they directly suppress economic growth at a time when the economy has remained stagnant for years.
The best example of this is the 3.8 percent net investment income tax on capital gains and dividends. Historically, capital gains taxes have a significant negative impact on capital formation, productivity, and economic growth while raising little or even negative revenue.
This tax hits many small businesses organized as pass-through entities that file as individuals, increasing their top federal rate to almost 45 percent. Because it is so destructive to economic growth, repealing this tax could increase wages by almost $400 a year and create 133,000 new jobs.
Repeal of this tax will help turn around the economy as part of President Trump’s promise of three percent economic growth.
By repealingObamaCare taxes, the BCRA is a huge win for taxpayers, especially those in the middle class.
Alex Hendrie is tax policy director at Americans for Tax Reform, a non-profit group aimed at promoting limited government.
The views expressed by contributors are their own and are not the views of The Hill.