Responding to the Supreme Court's historic ruling on the
Affordable Care Act, Republicans are refocusing criticism on the tax
fallout from health-care reform. Is it a tax hike? Yes. But on whom?
To Republicans, including presidential candidate Mitt Romney, the
Affordable Care Act is a mega tax increase that will be paid by
everyone from low income Americans and small businesses to gigantic
"Obamacare raises taxes on the American people by approximately
$500 billion," said Mr. Romney, responding to the Supreme Court's
historic health-care ruling outside the Capitol on Thursday.
For good measure, American Crossroads, the most influential of
the conservative "super political-action committees," is launching a
national cable TV ad campaign Saturday that claims that health-care
reform is a tax hike on the middle class.
"Now it's official," the ad claims. "Obama increased taxes on
struggling families. The middle class takes another hit."
Are Romney and his conservative allies correct?
The short answer is a qualified yes. The health-care law does
amount to a tax increase, but this increase will mainly hit high-
income Americans, such as Romney, who has historically paid much
lower tax rates than many middle-income Americans.
If anything, Romney's numbers, which are based on prior
government estimates that go out only to 2019, might be low. "If you
go out to 2022, it will raise [taxes] $800 billion to $1 trillion,"
says Marc Goldwein, senior policy director at the Committee for a
Responsible Federal Budget in Washington.
Included in the legislation are several major revenue raisers on
individuals or companies to pay for the expansion of health-care
- First is a surcharge of 0.9 percent on the Medicare taxes paid
on wages of $200,000 a year for those filing singly or $250,000 for
those who are married and filing jointly.
- In addition, there is a 3.8 percent tax on unearned income of
over $250,000, such as dividends and capital gains.
According to the congressional Joint Committee on Taxation, these
taxes alone are estimated to raise $210 billion over 10 years or
about 40 percent of the new revenue. Since Romney gets most of his
income from passive investments, based on his income of $42 million
over a two-year period, he would owe an additional $1.6 million.
- Another major tax increase is new taxes or fees on medical
devices, drug manufacturers, and importers of medical devices. The
Congressional Budget Office estimates this group would bring in an
additional $107 billion over 10 years.
- There is also a surcharge on high-cost health-insurance plans,
which will be mainly borne by the wealthy. …