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Health care law is not the largest tax increase ever

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posted on Jul, 4 2012 @ 09:05 AM

Using historical tax analysis provided by the Department of the Treasury, Aaron Sharockman at the Tampa Bay Times’ PolitiFact measured the total taxes contained in the law against the gross domestic product to see just how large a hit it will be for the country.

The rate came out to be .49%.

This is by far not the largest tax burden in American history. When measured against other tax increases since 1950, it came in tied for 9th place with President George H.W. Bush’s 1990 tax increase.

At No. 5 was Ronald Reagan’s tax increase of 1982: .80%.

Leading the list are the Revenue Act of 1951 at 1.52% and the Revenue Act of 1950 at 1.33%. Even these don’t compare to World War II-era Revenue Tax of 1942 (5.04%) and Revenue Tax of 1941 (2.20%)

There are many ways to define or measure the size of a tax increase, and not all tax increases have been measured the same way over time.

The health care tax provisions, for instance, take effect between 2011 and 2018, meaning the full effect of the legislation won't be felt until near the end of the decade. Also, it wouldn't make sense to compare 2019 dollars to 1985 dollars. You have to adjust for inflation, or express the amount as a total of Gross Domestic Product at the time, which is a way to measure the relative impact of a tax provision at the time it was enacted.

For our comparison, we used a method perfected by Jerry Tempalski, an analyst in the Office of Tax Analysis with the U.S. Department of the Treasury. In 2006, Tempalski tried to determine the relative impact of major tax revenue bills from 1940-2006. He used revenue estimates from Treasury and the Joint Committee on Taxation and calculated the impact as a percentage of GDP.

Tempalski's calculations do not include the 2010 health law, so we mimicked his work.

We used 2019 as our baseline because that's when all of the tax provisions of the law will be in effect. In 2019, the CBO estimates, the government will see increased revenues of $104 billion, which translates to a tax increase totalling .49 percent of projected GDP.

How does that stack up?

Depending on your rounding, the tax increases from the health care law are projected to be about the size of tax increases proposed and passed in 1980 by President Jimmy Carter, in 1990 by President George H.W. Bush and in 1993 by President Bill Clinton.

They would, however, be smaller than tax increases signed into law by President Ronald Reagan in 1982 and a temporary tax signed into law in 1968 by President Lyndon B. Johnson.

They also would be significantly smaller than two tax increases passed during World War II and a tax increase in 1961.

That's at least five tax increases in the United States that are larger — just since 1940 — than the one proposed in the health care law. And there are another three that are roughly equivalent.

Limbaugh's inflated rhetoric takes a wrong claim and puts it into the realm of the ridiculous. We rate it Pants on Fire.

I am not impacted by the healthcare issue and do not vote nor support any candidate or party so I believe I can take an unbiased view.

IMO a pretty good case that the many agenda driven critics have not done their homework and are only using it for cheap political purposes. Time will tell.

posted on Jul, 4 2012 @ 12:22 PM
Just curious, did you happen to see if he included the tax people will pay for not maintaining "minimum essential coverage"?

posted on Jul, 4 2012 @ 02:04 PM
reply to post by WTFover

Is that the 'if you can afford it but choose not to buy it'? I did not see any figure so labeled. I did find the following components in a link referenced in one of mine which does not seem to include it. Got any estimates?

The federal Joint Committee on Taxation, a nonpartisan committee of Congress with a professional staff of economists, attorneys and accountants, provided members a detailed breakdown of the tax impact of the health care law from 2010-2019.

• Starting in 2013, Medicare payroll taxes increase 0.9 percentage points for people with incomes over $200,000 ($250,000 for couples filing jointly). Also, people at this income level would pay a new 3.8 percent tax on investment income. The 10-year cost: $210.2 billion.

• Starting in 2018, a new 40 percent excise tax on high-cost health plans, so-called "Cadillac plans" (over $10,200 for individuals, $27,500 for families), kicks in. That's expected to bring the government a total of $32 billion in 2018 and 2019.

• Starting in 2011, there's a new fee for pharmaceutical manufacturers and importers. That's expected to raise $27 billion over 10 years.

• Starting in 2013, a 2.3 percent excise tax on manufacturers and importers of certain medical devices starts. The 10-year total: $20 billion.

• Starting in 2014, a new annual fee on health insurance providers begins. Total estimated 10-year revenue: $60.1 billion.

• Starting in 2013, the floor on medical expense deductions on itemized income tax returns will be raised from 7.5 percent to 10 percent of income. That's expected to bring in $15.2 billion over the next 10 years.

• Starting in 2011, a 10 percent excise tax on indoor tanning services. That's expected to bring in $2.7 billion over the next 10 years.

There also is money in the law going the other way. The plan includes government money, in the form of tax credits, to subsidize the cost of health insurance for lower-income people who don't get insurance through their employer. For the record, many Republicans and tax experts argue those shouldn't count as tax cuts. And there is a tax cut for some very small businesses that allows them to write off a portion of the cost of providing insurance to their employees.

Combined with various other revenue-generating provisions, the Joint Committee on Taxation estimates the health law will bring in more than $437.8 billion by 2019. The government's nonpartisan Congressional Budget Office estimated the additional revenues coming in to the government to be $525 billion between now and 2019.

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