The Truth about Speaker Pelosi’s Tax Increases
More than $700 Billion in Job-Killing Revenue Hikes
Even as they attempt to enact a government takeover of health care, Democrats must face the facts about the scope of the tax increases in their own legislation—that according to official estimates from both the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT), Speaker Pelosi’s health bill (H.R. 3962) would raise taxes by $729.5 billion:
- The Joint Committee on Taxation (JCT), in its official score of the Democrat bill, found that the “surtax” on high-income filers—many of whom are small businesses—imposed in Section 551 would generate nearly half a trillion dollars in revenue—$460.5 billion over ten years. While this tax is intended to target “high-income” filers, it is not indexed for inflation, meaning it will reach millions more Americans over time.
- The bill includes taxes on individuals who do not purchase government-forced health insurance. According to Section 501 of the bill, this tax increase would be applied to all individuals—including those with incomes under $250,000, thus breaking a central promise of then-Senator Obama’s campaign. As the Joint Committee on Taxation previously confirmed, individuals would be subject to a jail sentence for not paying the tax penalty associated with the government-forced insurance requirement. According to CBO and JCT, these provisions would raise taxes by $33 billion.
- Section 512 of the bill would impose new taxes on businesses who cannot afford to fund government-forced health coverage for their workers, therefore violating the bill’s new employer mandate and triggering an additional 8 percent payroll tax. According to CBO and JCT, these provisions would generate an additional $135 billion in revenue.
- JCT also found that additional tax increases—including corporate reporting ($17.1 billion), worldwide interest penalties ($26.1 billion), treaty withholding ($7.5 billion), and codification of the economic substance doctrine ($5.7 billion)—included in pages 334-59 of the bill would raise taxes by an additional $56.4 billion.
- The bill prohibits the reimbursement of over-the-counter pharmaceuticals from Health Savings Accounts (HSAs), Medical Savings Accounts, Flexible Spending Arrangements (FSAs), and Health Reimbursement Arrangements (HRAs), increases the penalties for non-qualified HSA withdrawals from 10 percent to 20 percent, and places a cap on FSA contributions. Because these savings vehicles are tax-preferred, these three provisions would raise taxes by $19.6 billion over ten years, according to the Joint Committee on Taxation. Moreover, because at least 8 million individuals hold insurance policies eligible for HSAs, and millions more participate in FSAs, all these individuals would not be able to keep the coverage they have without facing tax increases.
- Section 1802 of the bill includes provisions imposing a tax on health benefits—breaking a promise by Speaker Pelosi that, “We will not be taxing [health] benefits in any bill that passes the House.” This provision would raise taxes by an additional $2 billion over ten years.
- The bill also repeals the current-law tax deductibility of subsidies provided to companies offering prescription drug companies to retirees, raising taxes by $3 billion. Many may be concerned that this tax increase would lead to companies dropping their retiree health coverage.
- H.R. 3962 would impose $20 billion in excise taxes on medical devices. Many may echo the concerns of the Congressional Budget Office and other independent experts, who have confirmed that this tax would be passed on to consumers in the form of higher prices—and ultimately higher premiums.
- Thus the total amount of tax increases included in the Democrat bill—according to official estimates—equals $729.5 billion over ten years.
Imposing these new tax increases in the middle of a recession—with unemployment at 26-year highs—will only harm the economy and kill jobs. In fact, a study by Harvard Professor Kate Baicker indicates that a minimum of 5.5 million workers will be “at substantial risk of unemployment”—and that minority workers are twice as likely to lose their jobs as their white counterparts. Given these facts, one may understand why Democrats would not want to admit the truth about the full scope of their harmful tax increases.