Barack Obama promised during his presidential campaign that he would cut taxes for the middle class. Every time his big-spending agenda got challenged by Republicans as a deficit buster that would require vast, broad tax hikes to sustain, Obama insisted that his agenda would save money for the middle class by shifting the burden to the rich — and nowhere did he make that pitch harder than on health care reform. Now the Joint Committee on Taxation says that ObamaCare will hit the middle class with $3.9 billion in higher taxes by 2019:
Taxpayers earning less than $200,000 a year will pay roughly $3.9 billion more in taxes — in 2019 alone — due to healthcare reform, according to the Joint Committee on Taxation, Congress’s official scorekeeper.
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 able to deduct 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.
Consider this the Hope and Change analog to Bush 41’s notorious “Read my lips — no new taxes!” Of course, expiration dates on Obama promises are nothing new, but this one seems particularly cynical. It manages to hit the most vulnerable by denying tax deductions for medical care.
How will this work? Presently, those taxpayers who itemize their expenses can deduct medical care that costs more than 7.5% of their adjusted gross income (AGI), as noted above. What kinds of taxpayers have those high medical costs? The sick and the elderly, or at least older Americans still working and being productive. These are the people with massive medical bills who really need the tax deductions in order to pay the bills, and yet these are the very Americans on whose backs ObamaCare pays its own bills.
Advocates for the overhaul plan will say that these people will have better access to medical plans. In fact, few of the people in this demographic are uninsured, so the plan won’t help. Subsidies cut off at $88K, and those only apply to people without employer-based coverage anyway. Further, the Cadillac-plan tax will ensure that insurance coverage gets lowered, not raised, for millions of Americans, creating higher out-of-pocket costs instead of lowering them. They will wind up getting squeezed at both ends.
What did Obama say about his new bill? Just this Saturday, he claimed credit for not raising taxes on people earning under $200,000:
President Barack Obama in his Saturday radio address said the healthcare law keeps his campaign pledge to not raise taxes on the middle class. In his bid for the White House, he promised that individuals earning less than $200,000 and joint filers earning less than $250,000 would not see a tax increase under his watch.
In his defense, he probably still hasn’t read it.
Update: $3.9 billion, not $39 billion. I misread it, but when I first parsed it, I thought they were talking about a ten-year cost, as all of the other cost and revenue projections were structured. It’s $3.9 billion in just one year (2019), and presumably escalating from there. (h/t to Stanley Shivell)