Wash. D.C. msn.com
The American Health Care Act, AKA, Trumpcare, affects much more than just health insurance. Trumpcare would repeal many provisions of Obamacare that relate to insurance coverage, but it would also substantially change the amount of revenue the federal government collects. In other words, it’s not just health insurance reform, it’s tax reform, too.
The COngressional Budget Office estimated that if the version of Trumpcare passed by the U.S. House of Representatives became law, it would reduce revenue by $992 billion. In other words, Trumpcare is effectively a $1 trillion tax cut. The big questions are: Whose taxes are being cut, and what kinds of tax reform are being ushered in by this healthcare bill ? Trump’s plan would cut taxes largely by repealing many of the taxes put into place by Obamacare to fund the original health insurance law, including individual mandate taxes:Obamacare imposes a tax penalty on Americans who donot have qualifying health insurance coverage.The penalty amount is the greater of 2.5% of household income or $695 per adult and $374.50 per child without coverage, up to a maximum of $2,085.
Employer mandate taxes: Obamacare also contains an employer mandate that imposes taxes up to $3,390 per full time worker if larger employers fail to provide affordable comprehensive insurance coverage. Enforcement of the employer mandate has already been delayed. Tax increases on HSA’s and FSA’s: Obamacare increased the penalty on HSA and FSA withdrawals that are spent on anything other than qualifying medical care. Obamacare also put a limit on the amount of pre-tax money taxpayers could put into a flexible spending account.
By 2022, when all the changes proposed by Trump’s plan would become fully effective, households in the lowest income tax brackets would receive a tax cut of around $150 of their average after tax income. Families with incomes in the top 1% with household incomes of $3.9 million or greater, would save an average of $207,000 boosting their after tax incomes by 2.6%.