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The biggest tax increase since...1993?
Taking a look at where the Affordable Care Act ranks in U.S. tax history.
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Tess Vigeland: From now until Election Day, you can guarantee that politicians will be talking about the Affordable Care Act. The left will celebrate it as history-making legislation. The right will say it's historic in a totally different way.
Phillip Gingrey: This indeed is the largest tax in the history of our country.
That's Congressman Phillip Gingrey. Kai interviewed him last week after the Supreme court's decision to uphold the ACA.
Well, is he right? Is the Affordable Care Act the largest tax in the history of our country? We sent Marketplace's Shereen Marisol Meraji to find out.
Shereen Marisol Meraji: First off, thank you for not asking me to find out whether the Affordable Care Act is what Rush Limbaugh calls...
Rush Limbaugh: The largest tax increase in the history of the world!
That would be a much tougher assignment. As for the largest increase in U.S. history -- tax expert and Northwestern law professor Charlotte Crane says:
Charlotte Crane: Heavens no, I think, by any measure!
And here's Joseph Thorndike.
Joseph Thorndike: Director of the Tax History Project at Tax Analysts.
He says even after adjusting for inflation...
Thorndike: The Clinton tax hike in '93 was substantially bigger and the Reagan tax hike of 1982 was really much bigger.
Ed Zelinsky's a law professor who's written a lot about health care and says quibbling over whether the Affordable Care Act is the biggest tax increase since Genghis Khan is not the point.
Edward Zelinsky: I think it's a significant increase, I don't think it has to be overstated or described hyperbolically to say that it's an issue worth discussing.
Zelinksy points to the ACA's tax increase on Americans making $200,000 a year -- and the nearly 4 percent tax on their investment income. He says that could affect the way the proverbial 1 percent spends and could hurt the economy. But, Joseph Thorndike of the Tax History Project says it's simpler just to say:
Thorndike: That this is the biggest tax hike since 1993, which you know, hey that's a long time ago.
Thorndike says that's a much more defensible argument than calling the Affordable Care Act the biggest tax increase in American history.
I'm Shereen Marisol Meraji for Marketplace.
To know more about the Affordable Care Act and what it implies is I believe imperative for today's American citizens. If you want to find out more about it and understand how it will impact you, this article will help:
http://www.prestinaegele.com/funding-mechanisms-in-place-for-the-afforda...
Hope it will be of use.
I keep hearing about a 3.8% sales tax on home sales beginning in 2013, contained in ObamaCare. Is this true, and if so, how is this - and any other hidden taxes - accounted into the overall tax burden people will pay? What is the connection between real estate and health care that even permits such a tax?
I think it's unfortunate that Marketplace is choosing to echo Repub talking points. Here's a link from Politifact that seems to be better researched than the claim I heard on your show....http://www.politifact.com/truth-o-meter/statements/2012/jul/09/facebook-...
Shereen Marisol Meraji's piece that did little to unmuddy the waters. More public radio infotainment than good reporting, the report tempers the right wing rhetoric just a little replacing 'history of the world' with 'since Clinton's increase in '93' Hardly informs or encourages public discourse on tax policy.
The brackets and rates don't change in the obamacare tax increase. Capital gains tax does, but only 3.8% for people with >$250,000 in capital gains/dividends. (The other taxes are a .9% additional tax on medicare for high wage earners and a penalty between 1% and 2.5% of income if you don't have health insurance starting in 2013)
It turns out to be true that taxes go up for the rich but only marginally so. By raising the capital gains tax by 4% raises in excess of $ 50 billion dollars. I've modeled what happens with a 4% capital gains tax increase for every body. Below is a table on overall tax rates for different segments of the population. The last two columns compares overall tax percentage of current and obamacare. You can see the table better here: http://www.levelthefield.us/levelthefield/www/itax.html?planID=1051#acce...
You end up paying about 1% more in taxes if you make a million dollars a year and 2% more if you make from $4-35 million. If you make in the $300 million range you end up paying 3% more due to the increased capital gains tax. Overall taxes by income still hit hit those making $300,000 to $1 million the hardest. The rates go down for people who make more.
Overall Tax % by income
popPerc income tax Oba yourPlan
20% $9,300 $35 0% 0%
20% $20,600 $1,150.3 5% 6%
20% $34,400 $3,166.9 9% 9%
20% $56,400 $6,186 11% 11%
15% $97,400 $14,702 15% 15%
4% $210,000 $29,680 14% 14%
0.5% $486,395 $101,287.7 20% 21%
0.4% $1,021,643 $234,058 22% 23%
0.09% $4,024,583 $804,324.8 18% 20%
0.0097% $35,042,705 $5,393,517.4 13% 15%
0.0003% $344,759,000 $58,663,874 14% 17%
Capital Gains and preferred dividends get a 3.8% increase for gains and dividends ove $250,000. The table above overestimates the cap gains tax increase since it applies to everybody . But we know that "In 2010, the average person with income under $200,000 had a capital loss, not a gain. Only the top 10 percent had gains on average, and people earning over $1 million had $258 billion of the $261 billion of net gains reported on tax returns. That is 97% of the gains went to people earning over $1 million. " (http://www.forbes.com/sites/leonardburman/2012/01/18/mitt-romneys-teacha...)
The answer to the .1% of Americans and their wannabees who are cooking up this firestorm, buying off politicians and putting it out in on their media channels is: 'You are absolutely right. let's not fiddle with the capital gains/ dividend tax rate. Tax all income as ordinary income. End the special treatment for financiers and the moneyed elite.' By playing to Rush Limbaugh's game you become part of it.
God help us if we have to pay one bloody red cent more in taxes. I think Mr. Gingry and others that abhor taxes should go to Somalia and take notes as to how we can emulate that country. Taxes for the greater good (NOT WAR) are we really so petty?????? I think we are a country spiraling down basically because of greed!!!!
I am glad the Republicans show such concern about my VERY under employed 27 year old daughter who is trying hard BUT has no Health Insurance. It is all my daughters fault that she chose this route in her late 20s. She did not take personal responsibility. I am willing to bet not a single child or the grandchildren of the members of congress are going without health insurance. At some point we will need a revolution
