May 24, 2017
Senior Policy Analyst
May 24, 2017
The cost to give $1 trillion in tax cuts to the wealthy and corporations is 23 million uninsured Americans by 2026.
This is the bottom-line takeaway from the much-awaited Congressional Budget Office (CBO) score of the American Health Care Act, which House Republicans rushed through the chamber and narrowly passed (217-213) in early May.
The main driver behind the dramatic cut in healthcare coverage for millions of Americans is that the AHCA includes an $834 billion cut in funding to Medicaid over the next 10 years. The CBO estimates that this would directly result in 14 million of the 23 million more uninsured individuals in 2026. The second largest driver of the increase in uninsured individuals is the restructuring and $290 billion overall cut in size of the tax credits to help individuals pay for healthcare on the individual market.
The “savings” gleaned from taking away healthcare access from millions is poured directly into paying for $1 trillion in tax cuts, most of which are directed to the wealthy and corporations. The two biggest and most egregious tax cuts in the bill are its repeal of the Net Investment Income Tax and the Additional Medicare Tax, which together will cost $275 billion over the next decade. Both taxes only apply to individuals earning more than $200,000, so repeal solely benefits the top 2.7 percent of taxpayers. In fact, IRS data show that 31 percent of the benefit of eliminating these taxes would go to those with annual income of $10 million or more, who would receive an average tax break of more than half a million dollars annually.
At the state level, a recent ITEP analysis breaks down just how few would benefit from the repeal of these taxes in each state. For example, the analysis finds that only the top 1.4 percent of taxpayers in New Mexico would see any benefit from these tax cuts and on average they would receive a break of $8,470 each.
The details of this health proposal and regressive tax plan are troublesome and likely part of the reason that members of the House passed the bill without a CBO score, despite the fact that it is one of the most significant pieces of legislation considered by the chamber in years.
While the debate around healthcare reform rightly focuses on its impact on healthcare coverage, it is critical to remember that the core motivation for taking away healthcare from millions of people is to help pay for a tax cut for the rich. Taken together, the AHCA’s healthcare provisions and tax cuts represent “the largest Robin-Hood-in-reverse transfer of income up the income scale, from low- and middle-income families to those at the top — in our country’s modern history.” The AHCA faces a substantial hurdle getting through the Senate, where members on both sides of the aisle have been critical of the bill. The bill, as is, should no longer see the light of day. Furthermore, any changes to the nation’s health care law should not snatch health care coverage from millions of working families to finance tax cuts for wealthy people.