The Hill: Healthcare law to sock middle class with a $3.9 billion tax increase
Posted in: Latest News by admin on April 12, 2010
From The Hill:
Taxpayers earning less than $200,000 a year will pay roughly $3.9 billion more in taxes — in 2019 alone — because of healthcare reform, according to the Joint Committee on Taxation, Congress’ official scorekeeper for legislation.
The new law raises $15.2 billion over 10 years by limiting the medical expense deduction, a provision widely used by taxpayers who either have a serious illness or are older.
Taxpayers can currently deduct medical expenses in excess of 7.5 percent of their adjusted gross income. Starting in 2013, most taxpayers will only be allowed to deducted expenses greater than 10 percent of AGI. Older taxpayers are hit by this threshold increase in 2017
Once the law is fully implemented in 2019, the JCT estimates the deduction limitation will affect 14.8 million taxpayers — 14.7 million of them will earn less than $200,000 a year. These taxpayers are single and joint filers, as well as heads of households.
“Loss of this deduction will mean higher taxes for 14.7 million individuals and families making under $200,000 a year in 2019,” Sen. Chuck Grassley (R-Iowa) told The Hill. “The new subsidy for health insurance would not be available to offset this tax increase for most of these households.”
The healthcare law contains tax breaks for individuals purchasing health insurance, but phase out for those making $88,000 a year.
Grassley is the ranking member on the tax-writing Senate Finance Committee and voted against the health reform bill.
Couples earning less than $250,000 will also nicked by the tax, but the exact number is unclear. The JCT lumps this income level in with those making at least $500,000. Joint Tax estimates that 58,000 taxpayers earning between $200,000 and $500,000 annually will pay $74 million more in taxes in 2019.
About 5,000 taxpayers earning over $500,000 a year will pay $43 million more in tax because of the limitation.
President Obama in his Saturday radio address said the healthcare law keeps his campaign pledge to not raise taxes on the middle class. On the trail he promised individuals earning less than $200,000 and joint filers earning less than $250,000 would not see a tax increase under his watch