On Friday, Sen. Bernie Sanders (I-VT) sent out a tweet in support of the Affordable Care Act. The former Democratic presidential candidate noted that a repeal of the ACA would act as a massive tax cut for the wealthiest Americans.
‘If the ACA is repealed, the wealthiest 400 families would receive a tax cut worth an average of $7 million each.’
If the ACA is repealed, the wealthiest 400 families would receive a tax cut worth an average of $7 million each. https://t.co/D5qeYQdNsC
— Bernie Sanders (@SenSanders) January 13, 2017
Sanders’ source as an article in The Huffington Post which cited a recent report by the Center on Budget and Policy Priorities. As Sanders notes in his tweet, a repeal would give America’s 400 wealthiest families a tax break of about $7 million. In total, that group’s tax cut would equal about $2.8 billion. The 160 million low-income and middle-class families, on the other hand, would not get anything from this tax break.
In fact, many poor and middle-class families will see their taxes increase as a result of the ACA’s repeal. The reason being that the ACA’s appeal would, of course, eliminate the tax credits given to those families to help them buy health care.
‘Second, ACA repeal would significantly raise taxes on about 7 million low- and moderate-income families due to the loss of their premium tax credits — worth an average of $4,800 in 2017 — that help them buy health coverage through the health insurance marketplaces and afford to go to the doctor when needed.’
In order to help pay for the subsidies and tax credits needed to help low-income and middle-class families afford health care, the ACA imposed slightly higher taxes on America’s top income earners.
‘These individuals and couples pay an additional 0.9 percent Hospital Insurance tax on earnings above those amounts, raising the employee share of their Medicare tax rate on earnings to 2.35 percent, from 1.45. They also pay a 3.8 percent Medicare tax on unearned income above those thresholds that’s derived from wealth, such as capital gains, dividends, taxable interest, and royalties.’
Prior to the ACA, Medicare taxes only applied to money earned from working, whether you worked for an employer or were self-employed. Those taxes did not apply to unearned income. Most working and middle-class families do not have any unearned income, so Medicare taxes applied to all of their income.
Many wealthy Americans make some, perhaps even most, of their money through unearned income, so they were effectively exempt from Medicare taxes.
In short, not only will the ACA’s repeal take away health care from millions of people, it will also increase the tax burden on the poor while raising it on the wealthiest among us.
Featured image via Getty Images.