Ten years ago from Monday, Obamacare was signed into law on a party line vote. Since then, the law has resulted in skyrocketing premiums, billions of dollars in wasteful spending, and millions of Americans losing their healthcare plans.
Obamacare also imposed a trillion dollars in new or higher taxes on middle class Americans and on the healthcare system.
Many of these taxes have since been repealed by President Trump and Republicans in Congress, offering relief to families and businesses.
Republicans eliminated Obamacare’s highly regressive individual mandate penalty, a tax that forced Americans who could not afford government-approved insurance to pay a tax ranging from $695 for individuals to $2,085 for families.
The individual mandate tax disproportionately targeted the middle class – in 2017, 4,654,990 households paid $3,666,084,000 in individual mandate tax penalties. 74 percent of those households had annual income of less than $50,000, and 32 percent of those households had annual income of less than $25,000.
Three other Obamacare taxes were repealed at the end of last year.
The first was the medical device tax, a 2.3 percent excise tax on the sale of necessary and lifesaving medical devices such as MRI machines and hospital beds. The tax reduced research and development funding by $34 million in 2013 and caused a loss of about 28,000 jobs over the three years it was in effect. The Tax Foundation predicted this tax would reduce GDP by $1.7 billion and kill 21,390 full-time jobs over just two years.
The second was the health insurance tax (HIT), an annual tax on insurance premiums. This tax increased costs for middle class workers, seniors, and small businesses. The HIT was also highly regressive, with Americans earning less than $50,000 per year paying half of the tax. If it was not repealed, small businesses would have lost 286,000 jobs, and small businesses combined with middle class taxpayers would have had to pay more than $130 billion through the tax over a decade.
The third was the Cadillac tax, a 40 percent tax on employer-provided plans that exceed $10,200 for individuals and $27,500 for families. The tax was extremely unpopular with 81 percent of Americans in a 2018 poll stating they were opposed to it. The Kaiser Family Foundation found that if the tax were to have gone into effect in 2022, as scheduled, it would have cost families up to $3,400 annually. Repealing the Cadillac Tax was a $193 billion tax cut over the next decade, according to a recent Congressional Budget Office report.
While Congress has made great strides in repealing some of Obamacare’s most destructive and regressive taxes, lawmakers should continue working to repeal all Obamacare taxes moving forward. There are numerous taxes still in effect that are causing harm to taxpayers and the economy.
Obamacare’s employer mandate tax requires employers to pay $2,000 per full time employee for whom the employer does not provide government approved health coverage and at least one employee qualified for a health tax credit. According to the CBO, the mandate costs businesses $166.9 billion over ten years.
The net investment income tax imposes a 3.8 percent capital gains tax, creating a new top rate of 23.8 percent. The tax is also imposed on investment income, above $200,000 for individuals or above $250,000 for married filers, and for small businesses filing through the individual income tax system. Since the tax is not adjusted for inflation, it has grown significantly since it was first imposed.
Obamacare also imposed a 0.9 percent Medicare payroll tax on workers earning more than $200,000, or $250,000 for couples. Over a decade, the Obamacare payroll tax costs Americans $123 billion.
While these are some of the largest taxes still in effect, there are others on the books including the tanning tax, the Health Savings Account withdrawal tax, and the Flexible Spending Account tax. These should all be repealed.
Congress has made tremendous progress in repealing Obama-era taxes that hurt workers, businesses, and the economy as a whole. Congress and President Trump can build on their past successes by repealing all remaining Obamacare taxes, and improve the American healthcare system at a time when it needs relief the most.