The House Health Care Bill: A $700 Billion Tax Hike
Rea Hederman /
The New House Health Care Plan has several tax increases that will cost taxpayers $700 billion in the next ten years. Several of these taxes are new and were not in the earlier House bills.
The Surtax
The new Pelosi plan establishes a 5.4% surtax on joint filers with over $1 million in adjusted gross income or $500,000 for single filers. This is a single rate, which is different from the earlier House bills that had surtaxes at lower income levels. This surtax is not based on final adjusted gross income, but instead modified gross income. Thus the effective rate of the surtax is higher than just increasing marginal tax rates by 5.4%.
This surtax is also not indexed to inflation. This will cause more and more taxpayers to be hammered by the surtax even as their real income does not increase. This is one of the reasons that the Joint Tax Committee expects the cost of the surtax to more than double in year 10 of its estimate to $68.4 billion from $30.9 billion in 2011. The Joint Tax Committee estimates that taxpayers will be forced to pay $460.5 billion in higher taxes due to this provision. This is a larger tax increase than the 1993 Clinton income tax increase provisions that created a new tax bracket for high income taxpayers, increased the AMT, limited deductions and exemptions for high income earners. (more…)