FixHealthCarePolicy

Families and Small Businesses to be Taxed to Pay for Health Reform

To help pay for its expensive and painfully complex health care bill, Congress plans on burdening families and small businesses earning over $350,000 with a surtax. Ill-conceived “soak the rich” plans devised by Congress tend to inspire a yawn, a sigh, or applause from the vast majority of citizens who don’t have to actually pay the lopsided amount of taxes that the “rich” pay. Well, as it turns out, more and more of us might actually be “rich” enough to have to chip in to help fund government-run health insurance for the masses.

The surtax proposed by Rep. Charlie Rangel (D-NY) would stand independent of the income taxes Americans are already paying. Generally, a surtax is added onto an individual or business’s taxable income. However, in a maneuver to include more tax-filers into Congress’s double-tax treasure chest (or triple-tax if you invest in anything), Congress has decided to make the surtax applicable to your adjusted gross income, or AGI. Your AGI is what your income looks like before you take out deductions like state and local taxes, medical expenses, and mortgage interest payments. So it’s a higher number than your taxable income. (more…)

Tags: Charlie Rangel, congress, health care, health care reform, surtax

Congress Raises Taxes on Poor to Pay for Health Care … Again

Throughout his campaign, President Barack Obama repeatedly promised the American people: “If you’re a family that’s making $250,000 a year or less you will see no increase in your taxes. Not your income tax, not your payroll tax, not your personal gains tax, not any of your taxes.” Just 15 days into office, President Obama signed a bill expanding the children’s health insurance program that was paid for with a 156% tax hike on tobacco. Since slightly more than half of today’s smokers (53%) earn less than $36,000 per year, Obama’s first effort at expanding government’s role in health care also became his first broken promise.

But that first Medicaid expansion was minor league compared to the estimated $1.3 trillion health care plan Congress is considering now. And how is Obama planning to pay for his health care bill? Tax hikes. Including employer health care mandates, which as Heritage scholars James Sherk and Robert Book explain, are really just a tax on low-income workers: (more…)

Tags: employer mandate, pay or play, surtax

The Rangel Surtax

House Ways and Means Chairman Charlie Rangel announced that a surtax on individuals and families above a certain income level would be used to pay for health care reform. The surtax is 1% for joint filers over $350,000, 1.5% for joint filers over $500,000 and 5.4% for joint filers with over $1,000,000 in adjusted gross income ($280,000, $400,000, $800,000 for individuals respectively). The surtax would be increased if large cuts in health care do not materialize. The surtax is on adjusted gross income, so the surtax is applied before any deductions and applies equally to all forms of income such as wages, dividends, capital gains, etc.

This surtax will have a large impact on small businesses:

• Sixty percent of all returns affected by the surtax have small business or partnership income.
• Twenty percent of the returns affected by the surtax get over half their income from small business or partnership income. These tax payers pay one quarter of all income taxes subject to the surtax.
• With the scheduled expiration of President Bush’s tax cuts, the federal top marginal rate on small business earnings will be 48% and exceed 50% in most states. (more…)

Tags: Charlie Rangel, surtax