Tax Policy Fellow
Senate Republicans have removed two of their health bill’s many regressive tax cuts — those repealing the so-called Medicare taxes (the additional 0.9 percent Hospital Insurance payroll tax on high-income people and the 3.8 percent tax on unearned income) — to address concerns that the bill favors the wealthy. “It’s not an acceptable proposition to have a bill that increases the burden on lower-income citizens and lessens the burden on wealthy citizens,” Senator Bob Corker has stated. But even with that change, the bill would fail Corker’s standard. It would still include nearly $400 billion in tax cuts overwhelmingly for high-income households and corporations, including new tax cuts for Health Savings Accounts favoring the wealthy. The core of the bill would remain tax cuts for the wealthy and corporations that are financed by cutting assistance to help millions of low- and moderate-income families afford health coverage and care.
The bill’s tax breaks include:
The companies benefiting from this tax cut would likely include several that state Attorneys General have sued for their role in the opioid crisis. And, the bill pays for the tax cut in part by deeply cutting Medicaid, which has a crucial role in combating the opioid crisis.
While Senate Republicans may have decided not to repeal the Medicare taxes in their health bill, they may seek to repeal them in a future tax bill. Both the Trump Administration’s tax plan and the House GOP “Better Way” tax plan would repeal the 3.8 percent tax on unearned income. In response to the reported dropping of the Medicare-related tax cuts from the Senate health bill, Americans for Tax Reform President Grover Norquist said, “there’s a tax cut coming, so we’ll get this. . . . This is three-dimensional chess.” In short, the wealthy and corporations would be big winners under the Senate GOP health bill, even with its revisions, and could get even bigger tax cuts in an upcoming GOP tax package.