Last year, 4,279 individuals renounced their U.S. citizenship or terminated their long-term U.S. residency, according to the Treasury Department. This figure is up by 25.3 percent from 2014, when 3,415 individuals...
- The Tax Policy Blog
- Estimating the Tax Costs of 'Obamacare'
Estimating the Tax Costs of 'Obamacare'
Over at The Foundry, Kathryn Nix and Alyene Senger consider the tax impact of the Patient Protection and Affordable Care Act – known as “Obamacare” to its critics and supporters alike. Many recent sources have pointed out that “the wealthy” would be better off if PPACA were found unconstitutional, because of the 3.8% surtax included in the law for those earning more than $200,000 a year. Nix and Segner argue, however, that the tax burden of Obamacare will end up being quite widespread and fall on the majority of the U.S. population, not just a handful of high-income earners.
They emphasize that, over time, the normal process of inflation will pull an ever-larger number of Americans into the pool of individuals subject to higher payroll taxes:
Obamacare raises taxes by more than $500 billion in a decade, and a number of these will hit Americans at all levels of the income scale.
Beginning in 2013, the law increases the Hospital Insurance (HI) payroll tax from 2.9 percent to 3.8 percent for individuals earning above $200,000 and couples earning more than $250,000. The payroll tax is also applied to these earners’ investment income for the first time. But since the increased tax rates aimed at these higher income brackets are not indexed to inflation, they will impact more middle-class Americans every year.
In fact, the higher payroll tax rate will eventually hit a huge majority of Americans.
If you’re wondering how the tax law changes in Obamacare will affect your household in particular, make your way to the Health Care Tax Calculator, where you can get a quick estimate of how much your tax burden will rise as the law phases in.
For more information on the constitutionality of the law itself, see the Tax Foundation’s Supreme Court brief, The Health Care Individual Mandate is Beyond Congress’s Taxing Power, by Joseph Henchman and Laura Lieberman.
Get Email Updates from the Tax Foundation
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.