Tax Policy Center: Repealing the Affordable Care Act Would Cut Taxes For High Income Households, Raise Taxes For Many Others

By Howard Gleckman:

Repealing the Affordable Care Act would cut taxes significantly for the highest income one percent of US households, according to a new Tax Policy Center analysis. At the same time, it would raise taxes on average for low- and moderate-income households.

The ACA includes several different tax provisions. On one side of the ledger is the large refundable tax credit that subsidizes insurance premiums for many people who buy coverage on the ACA’s health exchange. On the other side: tax increases designed to both raise revenue and encourage the purchase of adequate—but not excessive--insurance. They include a penalty tax for individuals without adequate insurance, an excise tax on employers with 50 or more workers who offer insufficient coverage, and the so-called Cadillac tax on generous employer-sponsored health benefits. The law also created two extra taxes on high-income individuals--a 0.9 percent payroll surtax on earnings and a 3.8 percent tax on net investment income for individuals with incomes exceeding $200,000 ($250,000 for couples).

Overall, dumping all the ACA taxes would cut taxes by an average of $180 per household in 2017—a 0.3 increase in after-tax incomes. Of course, taxes are not the only measure of people’s well-being. A new analysis by the Urban Institute’s Health Policy Center estimates that eliminating the law without adopting a replacement could increase the number of people without insurance by more than 29 million, putting them at risk for out-of-pocket medical costs that would far exceed any tax savings.

The Full Story (December 15, 2016)