List of Revenue (Tax) Increases and Revenue (Tax) Decreases in Baucus Bill

October 21, 2009

Gerald Prante

Gerald Prante

Per CBO and JCT description, here is a list of the revenue increases and decreases in the Baucus bill, along with their 10-year score (2010-2019) in billions of dollars. We will be listing a summary of the spending provisions on Thursday.

Revenue Increases (many of which are taxes)

Penalty Payments by Uninsured Individuals ($4)

Penalty Payments by Employers ($23)

40% excise tax on health coverage in excess of $8,000/$21,000 indexed for inflation by CPI-U plus 1% and increased thresholds for over age 55 retirees or certain high-risk professions; levied at insurer level; employer aggregates and issues information return for insurers indicating amount subject to the excise tax; nondeductible; high 17 state transition relief ($201.4)

Employer W-2 reporting of value of health benefits (negligible)

Conform the definition of medical expenses for health flexible spending arrangements to the definition of the itemized deduction for medical expenses (excluding over-the-counter medicines prescribed by a physician) ($5.4)

Increase the penalty for nonqualified health savings account distributions to 20% ($1.3)

Limit health flexible spending arrangements in cafeteria plans to $2,500 ($14.6)

Require information reporting on payments to corporations ($17.1)

Additional requirements for section 501(c)(3) hospitals (negligible)

Impose annual fee on manufacturers and importers of branded drugs ($22.2)

Impose annual fee on manufacturers and importers of certain medical devices ($38.6)

Impose annual fee on health insurance providers ($60.4)

Study and report of effect on veterans health care (no revenue effect)

Eliminate deduction for expenses allocable to Medicare Part D subsidy ($5.4)

Raise 7.5% AGI floor on medical expenses deduction to 10%; AGI floor for individuals age 65 and older (and their spouses) remains at 7.5% ($15.2)

$500,000 deduction limitation on taxable year remuneration to officers, employees, directors, and service providers of covered health insurance providers ($0.6)

Fraud, Waste and Abuse ($2)

Premium Taxes for Patient-Centered Outcomes Research ($2.6)

Associated Revenues Resulting from Spending Changes ($11.6)

Revenue Decreases

Tax Credits for Small Business Employers ($23)

Provide income exclusion for specified Indian tribe health benefits (less than $50 million)

Simple cafeteria plan nondiscrimination safe harbor for certain small employers (negligible)

Qualifying therapeutic discovery project credit ($0.9)

Topics

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A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

Inflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power.

Itemized deductions allow individuals to subtract designated expenses from their taxable income and can be claimed in lieu of the standard deduction. Itemized deductions include those for state and local taxes, charitable contributions, and mortgage interest. An estimated 13.7 percent of filers itemized in 2019, most being high-income taxpayers. 

An excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections.

A tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly.