The Atlanta Journal-Constitution
Not one dime? True; more like tons of dimes at stake from repeal
Facing the possibility that congressional Republicans and President Donald Trump will repeal the Affordable Care Act, Democrats are trying to warn Americans about some of the consequences. Sometimes, though, such warnings have gone too far.
One example is a statement by U.S. Sen. Claire McCaskill, D-Mo., in a Jan. 23 interview on MSNBC’s “Morning Joe.”
During a discussion of the women’s march held a few days earlier, McCaskill said Democrats needed to shine a light on potential policy changes by the Trump administration and the GOP-controlled Congress. As an example, she cited how the tax code could change if lawmakers repealed the ACA.
“Not one dime of the tax cut that they are going to enact with the repeal of Obamacare will go to people who make under $200,000,” McCaskill said.
We’ll take a closer look at this statement, with the acknowledgement that we don’t know the final shape of a congressional repeal of the law (or, for that matter, whether one will happen at all). Of course, neither does McCaskill. We do know, however, that McCaskill is wrong to say that a repeal would only give tax cuts to the rich.
Taxes on the rich
While the Affordable Care Act is best known for its provisions aimed at expanding health insurance coverage, it is also a major tax bill, since its authors sought to provide ongoing revenue sources to support other portions of the bill.
When we checked with McCaskill’s office, they said that McCaskill was referring to a provision of the bill that imposed a 0.9 percentage point payroll surtax for individuals earning $200,000 or married couples earning $250,000, along with a 3.8 percent tax on unearned income for higher-income taxpayers.
This is indeed the biggest tax increase in the law. Shortly before it was passed, the Joint Committee on Taxation projected that these provisions would raise $210.2 billion in reve-
nue over the 10-year period between 2010 and 2019.
This makes it clear that a full repeal of the Affordable Care Act’s tax provisions would enact a significant tax cut for Americans earning more than $200,000 a year.
Taxes on everyone else
However, the law imposed other taxes that would hit more than just the wealthy.
For instance, several provisions of the law changed the rules governing flexible spending accounts for medical expenses, such as limiting the maximum dollar amount people could put into them.
In addition, the law imposed a 10 percent tax on tanning-bed services.
Combined, the JCT projected that these provisions would raise more than $37 billion over 10 years. But that’s not all. The provisions we’ve listed so far are direct taxes that could (and likely would) hit middle-class Americans. However, the law also contains taxes on drug makers and the health insurance industry that would likely be passed through to middle-class Americans.
According to JCT’s projection, the taxes on the drug and insurance industries would raise $87.1 billion in all and one estimate says $17 billion would hit the middle class.
Finally, a repeal would almost certainly lift the mandate that Americans purchase health insurance or else face a tax penalty. In 2014, Americans paid $1.7 billion in penalties.
So, over the 10-year window used by JCT, this provision would be expected to produce revenues of $17 billion over 10 years.
If you put all these categories together, the tax changes add up to $71 billion potentially going back to middle-income Americans.
While a repeal of all taxes in the law would disproportionately benefit high-income Americans, McCaskill’s notion that “not one dime” of the tax benefits would go to ordinary Americans goes too far.
Our ruling
McCaskill said, “Not one dime of the tax cut that they are going to enact with the repeal of Obamacare will go to people who make under $200,000.”
She has a point that if all taxes in the law are repealed, then high-income earners are likely to reap a majority of the benefits. However, $71 billion in tax cuts spread more broadly across the income spectrum are a far cry from “not one dime.” The statement contains some element of truth but ignores critical facts that would give a different impression, so we rate it Mostly False.