Obamacare taxes on the rich may remain after all
The Senate GOP health care bill explained
Looks like the Senate health care bill may not cut Obamacare’s taxes on the rich.
The Senate is set Thursday to unveil an updated version of the bill to repeal the health care law. The proposal is expected to keep taxes on the wealthy, said Texas Senator John Cornyn, the Senate’s majority whip, on Tuesday. The funds could then be used to help lower premiums and deductibles.
This would be a retreat from a key GOP promise.
Congressional Republicans have come under fire for seeking to eliminate the taxes while stripping coverage from millions of Americans. Repealing the taxes would cost the federal government roughly $230 billion in revenue over 10 years.
Obamacare imposed two taxes on the well-to-do to help pay for the expansion of health coverage to millions of low- and moderate-income Americans. It levied a 3.8% tax on investment income and a 0.9% Medicare payroll tax on incomes over $200,000 for individuals and $250,000 for married couples who file jointly.
House repeal legislation, which narrowly passed in March, and the original version of the Senate bill would jettison the investment income tax in 2017 and the Medicare payroll tax in 2023.
Those in the top 0.1%, earning $5 million or more, would receive an average tax cut of nearly $250,000 in 2026, according to an analysis by the Tax Policy Center. Those in the top 1%, who earn $875,000 and up, would see an average tax savings of $45,500 a year.
Former President Obama, in a Facebook post last month, called the plan "a massive transfer of wealth from middle-class and poor families to the richest people in America."
The Senate, however, is rewriting its bill in hopes of securing the necessary 51 votes for passage. High on the agenda is providing more money to combat opioid addiction and making the subsidies more generous, particularly for older Americans and for lower-income consumers.
"In the initial draft bill, if you looked at lower-income citizens and how they were being dealt with on the exchanges, they were going backwards, and that is not tenable to me," Senator Bob Corker of Tennessee told CNN last month. "At the same time, the 3.8% tax on the wealthy was being done away with. That’s not a trade-off that is appropriate."
The Congressional Budget Office estimated that 22 million fewer people would be covered by 2026 under the Senate bill, compared to current law — a projection that did not sit well with many moderates.
By keeping the taxes in place, senators would be able to augment the state stability fund. That would give governors more money to lower premiums and deductibles, Cornyn said. Doing that may drive away conservative lawmakers, though.
A key analysis of the new bill by the Congressional Budget Office is expected early next week.
–CNN’s MJ Lee, Lauren Fox and Ted Barrett contributed to this report.