Study: ObamaCare repeal would mean tax cut for high earners

Study: ObamaCare repeal would mean tax cut for high earners
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Repeal of ObamaCare would cut taxes for high-income earners while causing an increase in taxes for some lower-income people due to the loss of tax credits, a new analysis finds.

The analysis from the Tax Policy Center, a joint effort of the Brookings Institution and the Urban Institute, finds that the top 1 percent of earners would get, on average, a $33,000 tax cut, or about 2 percent of after-tax income, from ObamaCare repeal.

Among middle- and low-income people, by contrast, most people would either get a small tax cut or no change in taxes at all.

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But a small percentage of people would be hit with a significant tax increase, largely due to the loss of ObamaCare’s tax credits or subsidies that help people afford health insurance. 

"Repealing the Affordable Care Act would cut taxes significantly for the highest income one percent of US households,” the study finds. “At the same time, it would raise taxes on average for low- and moderate-income households."

ObamaCare repeal provides a substantial tax cut for high-income people by doing away with two taxes on high-income earners that were enacted to help pay for the law’s expansion of coverage. Those are a 0.9 percent payroll surtax and a 3.8 percent investment income tax for people making over $200,000 a year. 

Some taxes abolished by ObamaCare repeal would be particularly unpopular. The “Cadillac Tax” on high-cost healthcare plans has drawn opposition from both parties in Congress who worry that it causes employers to shift health costs onto workers by making plans less generous. 

Many experts have praised the tax, though, as helping to fight rising healthcare costs by incentivizing the system to become more efficient. 

Republicans are planning to delay the repeal of some ObamaCare provisions, like the tax credits to help people afford coverage, to buy time to enact a replacement. But repeal of the taxes on high earners could be immediate.