How Much Does ObamaCare Raise Taxes?
Many people complain that ACA/Obama care raises their taxes, making it seem like they will loose all their money because of this law. What percentage rise has/will this law contribute in taxes or will/has the budget been cut from other programs for this?
Answer
There is no perfect answer to how much taxes people under ObamaCare, because it differs by income. Most Americans will mainly only face the fee for not having coverage.
Tax subsidies aside, ObamaCare implemented about 20 taxes. A few effect the average person, a few effect high earners, most affect industry.
Most people will only face a single ACA tax, that is the fee for not having coverage.
Beyond that, higher earners and those with capital gains face a few extra tax increases, those are:
- Medicare Tax on Investment Income (Capital Gains tax increase) of 3.8% over $200k/$250k
- Medicare Part A Tax increase of .9% over $200k/$250k
There was also an increase to the tax for early withdrawals of medical savings accounts.
There were also taxes that could have affected people indirectly, like the fee for employers not providing full-timers with coverage and the tanning bed tax and some taxes on industry.
So how much of a tax increase is that to the average person? That isn't easy to answer.
- The average person with cost assistance and health insurance saw big savings (anywhere from hundreds to thousands a year).
- The average person without cost assistance making over 400% FPL potentially saw some increases from the cost of coverage and the mandate.
- The average person with lots of investment income or a high earner or a business owner saw bigger increases to their tax burden.
- The rest of the taxes (the ones they want to repeal with the AHCA) are on large employers, industry, and high-end health plans (each affecting who they effect).
The problem here is that looking at taxes in isolation doesn't tell us the whole story, we have to consider expanded coverage, cost assistance, and economic factors.
In short, there is no good answer to the question you asked, but I'll tell you, for the very roughly 1 in 2 Americans who don't pay the income tax (due to their effective tax rate), and then the next 20% of Americans (so like 70% of families) the ACA was essentially a net win.
Meanwhile "TrumpCare" cuts all the taxes and many subsidies. This means the 70% will have it worse or about the same, but those closer to the top, and those who will benefit from the related growth (if it happens), could be better off.
The main people who benefit from the tax cut are those making over $200k, large employers, and some industry (obviously providers will suffer with tens of millions of less customers, but many industries will benefit from not having to provide coverage).
Learn more about exactly what taxes are in the ACA. Learn more about the cost of the ACA. Learn about the cost of the ACA repeal.