House Health Bill’s High-Income Surcharge: A Reasonable Approach
Impact on Small Businesses Would Be Modest
End Notes
[1] For a couple, the surcharge would represent 1 percent of income between $350,000 and $500,000; 1.5 percent of income between $500,000 and $1 million; and 5.4 percent of income in excess of $1 million. For an individual, the surcharge would represent 1 percent of income between $280,000 and $400,000; 1.5 percent of income between $400,000 and $800,000; and 5.4 percent of income in excess of $800,000. If the health cost savings the bill projects do not materialize, the 1 percent rate would rise to 2 percent and the 1.5 percent rate would rise to 3 percent.
[2] According to House Ways and Means Committee Fact Sheet, “Health Care Surcharge Would Not Affect 99% of Households,” July 14, 2009, http://waysandmeans.house.gov/media/pdf/111/healthcs.pdf.
[3] Congressional Budget Office, “Data on the Distribution of Federal Taxes and Household Income,” April 2009, http://www.cbo.gov/publications/collections/taxdistribution.cfm.
[4] “Estimated Effects of the Revenue Provisions of H.R. 3200, The “America’s Affordable Health Choices Act of 2009,’” Fiscal Years 2010 – 2019, JCX-31-09, July 14, 2009, http://jct.gov/publications.html?func=startdown&id=3570.
[5] The Administration proposals are to reinstate the 36 and 39.6 percent tax brackets, reinstate the personal exemption phaseout and limitation on itemized deductions, and impose a 20 percent rate on capital gains and dividends on taxpayers earning more than $250,000 (married) and $200,000 (single).
[6] Office of Management and Budget, Updated Summary Tables, Budget of the U.S. Government, Fiscal Year 2010, May 2009, p. 22, available at http://www.whitehouse.gov/omb/budget/fy2010/assets/summary.pdf.
[7] CBPP calculations based on Congressional Budget Office and IRS Statistics of Income data.
[8] Tax Policy Center Table T09-0348, “America's Affordable Health Choices Act of 2009 Surcharge on High Income Individuals,” July 14, 2009, http://www.taxpolicycenter.org/numbers/Content/PDF/T09-0348.pdf.
[9] Congressional Budget Office, “Effective Federal Tax Rates for All Households, by Comprehensive Household Income Quintile, 1979-2006,” April 2009, http://www.cbo.gov/publications/collections/tax/2009/effective_rates.pdf .
[10] According to House Ways and Means Committee Fact Sheet, “Health Care Surcharge Would Not Affect 99% of Households,” http://waysandmeans.house.gov/media/pdf/111/healthcs.pdf; Tax Policy Center Table T09-0351, “Distribution of Tax Units with Business Income, by Modified Adjusted Gross Income Level, 2011,” July 14, 2009, http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2426&DocTypeID=7 .
[11] IRS, “The 400 Individual Income Tax Returns Reporting the Highest Adjusted Gross Incomes Each Year, 1992-2006,” p. 4, http://www.irs.gov/pub/irs-soi/06intop400.pdf.
[12] Tax Policy Center Table T09-0351, “Distribution of Tax Units with Business Income, by Modified Adjusted Gross Income Level, 2011,” July 14, 2009, http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2426&DocTypeID=7 .
[13] Jason Levitis and Chuck Marr, “History Contradicts Claim That President’s Budget Would Harm Small Business Job Creation,” Center on Budget and Policy Priorities, March 26, 2009, https://www.cbpp.org/cms/index.cfm?fa=view&id=2742.