Repealing Obamacare would give 400 of the richest families in America a tax cut worth an average of $7 million each, even as it yanks health insurance away from low- and middle-income Americans.
That may sound like a harsh way of characterizing repeal. But it’s an accurate one, according to a new report from the Center on Budget and Policy Priorities.
The Affordable Care Act called for a lot of new government spending, in the form of tax credits to help people pay for insurance and funding for states that expand eligibility for Medicaid. To help pay for all of these new outlays, the law imposed a “surtax” that basically expands the existing Medicare payroll tax.
The surtax applies exclusively to incomes above $250,000 a year for couples and $200,000 for individuals ― which means that only people with such high incomes end up paying it.
Full repeal, which President-elect Donald Trump and Republican leaders in Congress began to pursue formally last week, would eliminate the spending and the taxes. A series of analyses have already made clear what that would mean in practice: More than 20 million people would lose insurance, while America’s millionaires would get a windfall.
But there are millionaires and then there are multimillionaires ― and with this new report, researchers at the Center on Budget decided to look exclusively at some of the latter.
They did this by using data from the Brookings-Urban Tax Policy Center and, separately, from the IRS, in order to figure out what the tax cut would mean for the 400 households in America with the highest tax liabilities. On average, these families have incomes of $318 million a year, according to the report, which means the $7 million tax cut they would get is roughly equivalent to increasing their incomes by 2 percent.
Meanwhile, the total revenue loss from giving a tax cut to those 400 families comes to $2.8 billion a year. According to the center, that’s about what it costs to finance tax credits for 800,000 people living in the District of Columbia and 20 of the smallest states.
Of course, Republicans have promised to replace the Affordable Care Act with some other coverage scheme. And recently several GOP senators suggested leaving some of the law’s taxes in place, at least temporarily, just to make sure the replacement scheme has sufficient funding to pay for itself.
But getting the rest of the party to go along with that seems like a long shot. Reducing taxes on the wealthy has been a longtime GOP priority. And last year, when congressional Republicans crafted a prototype of a repeal bill, those upper-income taxes were among the Obamacare provisions that the legislation would have eliminated.
In fact, there’s no guarantee Republicans can even agree on an Obamacare alternative, which means it’s entirely possible that the alternative to the health care law will turn out to be nothing.
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