Tax Benefits for the Wealthy

The wealthiest Americans stand to gain the most with the repeal of Obamacare and a number of taxes that were implemented by Democrats to fund the health care subsidies for elderly and less affluent Americans.

Two of the most important taxes that the Obamacare replacement, the American Health Care Act (AHCA), targets are the medicare surtax and the net investment income tax.

The medicare surtax, very simply, is a payroll tax that we have been paying all along but that the Democrats raised by .9% on individuals who earn $200,000 (couples – $250,000) annually. An estimated 2% of the U.S. population has been subject to the increase in the medicare surtax and this tax was scheduled to contribute 123 billion dollars to support those enrolled in Obamacare between 2016 and 2025 according to the Congressional Budget Office.

The net investment income tax, on the other hand is tied not to wages but to investment earnings. It is essentially an increase of 3.8% to the capital gains tax for those in the highest tax bracket. This proposed tax cut will give the top .1% of American households an average $165,090 break on their taxes.

Presumably the CBO, when they finally have an opportunity to score the AHCA, will be able to accurately add up the costs for the program and the revenue that will likely be missing after the tax cuts to the wealthiest Americans and determine if the AHCA is solvent or if it will increase the national debt.

The Republican leadership determined that they would proceed with marking up the legislation without the CBO score – a decision that frustrated many of the most fiscally conservative members of Congress. Congress is being asked to approve and comment on a measure without knowing the impact on the national debt and the number of Americans who stand to lose their insurance.

The bottom line: The AHCA – or Trumpcare as some are calling it – will result in tax cuts that benefit the wealthiest Americans and less financial support for middle class Americans seeking health insurance.

 

 


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