Giving to the rich, taking from the poor

The debate on repealing Obamacare has rightly focused on all those Americans who would be hurt – the estimated 18 million who could lose their health insurance in the first year.

But there should be more attention on those who could benefit right away – the super rich who would get a huge tax cut.

At the same time, millions of Americans – including 1.2 million Californians, and more than 100,000 living in south San Joaquin, Merced and Stanislaus counties – would lose tax credits on health insurance premiums they now get under the Affordable Care Act.

House Republicans hell-bent on repealing Obamacare don’t mention it would rob from the vast majority to give a windfall to the wealthy. Is that what House Majority Leader Kevin McCarthy of Bakersfield and other California Republicans really want? How will they defend this to their constituents who would get the short end of the stick?

But there is something else the most popular House GOP repeal bill would kill – two tax increases on upper-income households (individuals earning $200,000 or more a year, couples earning $250,000 or more) that have been used to subsidize health care for families. One is a 0.9 percentage point increase in the top Medicare payroll tax rate to 2.35 percent; the other is a 3.8 percent surtax on investment income.

A repeal plan unveiled Monday by Republican Sens. Bill Cassidy of Louisiana and Susan Collins of Maine would temporarily keep those tax increases to help fund a Republican alternative plan. Their plan would also give states the option of keeping Obamacare. That means this bill won’t get very far in their own party.

If those tax hikes are ended, millionaires would reap 80 percent of the tax savings, according to an analysis of IRS data by the Center on Budget and Policy Priorities.

The top 0.1 percent – those with annual incomes above $3.8 million and averaging about $7.5 million – would receive tax cuts of more than $195,000 each. And the 400 highest earners (average income $318 million in 2014) would get an average tax savings of $7 million a year, a total windfall for that group of $2.8 billion.

While neither the IRS nor the Franchise Tax Board identify where the 400 live, it’s a good bet that more than a few are Californians.

On the other hand, the budget center says, repeal would raise the tax bills for about 7 million low- and moderate-income families because they would lose the premium tax credits that help them buy health coverage, an average of $4,800 a year.

That $2.8 billion windfall for the 400 highest earners is the equivalent of how much in tax credits that 813,000 people in 20 states and the District of Columbia would lose. In California, the tax credits on the chopping block average about $3,700 a year and total about $5 billion.

So the rush to kill Obamacare is not only unfair and dangerous for public health; it’s also a lucrative, reverse-Robin-Hood gift to the already rich. It’s even more outrageous when there are Republican plans to cut even taxes of the already wealthy. Unless they’re planning to add to the deficit, what other services will have to be elimianted when that happens?

In his inaugural speech, President Donald Trump vowed to look out for the forgotten and struggling Americans. When the details of his plan to replace Obamacare and still offer “insurance for everyone” finally emerge, we hope Trump will be a man of his word. But to do it, he’ll have to fight his own party in Congress and pick his own pocket.

This story was originally published January 24, 2017 at 9:55 AM with the headline "Giving to the rich, taking from the poor."