Research Briefing

When Democrats Say ‘Deficit Neutral,’ Americans See Their Taxes Go Up

DEM BLOG THINK PROGRESS: “NEW BAUCUS DEFICIT NEUTRAL BILL COSTS $829 BILLION …” (Igor Volsky, “CBO: New Baucus Deficit Neutral Bill Costs $829 Billion, Will Reduce Deficit By $81 Billion Over Next Decade,” Think Progress “Wonk Room” Blog, 10/7/09)

DEFICIT NEUTRAL? HOW DOES THAT WORK?
DEMOCRAT HEALTH CARE BILL HITS AMERICANS WITH AT LEAST $432 BILLION IN HEALTH CARE TAXES

Senate Dems’ Bill Raises $201 Billion In Taxes On Health Insurance Policies Over $8,000 Per Individual And $21,000 Per Family. “Those costs would be partly offset by receipts or savings, totaling $311 billion over the 10-year budget window, from four sources: net revenues from the excise tax on high premium insurance plans, totaling $201 billion ...” (Congressional Budget Office, “Letter to Chairman Max Baucus,” 10/7/09)

• That Will Raise Health Insurance Premiums On Many Americans. “The thinking behind the tax is that it would raise hundreds of millions of dollars while at the same time curbing health-care spending by leading insurers or employers to stop offering the costliest plans to avoid the tax, or passing the tax on to employees in the form of higher premiums, which might lead employees to seek cheaper plans.” (Chairman’s Mark, “America’s Healthy Future Act Of 2009,” Introduced 9/16/09; Alec MacGillis, “Ahead Of Obama’s AFL-CIO Appearance, Labor Officials Express Concern Over Excise Tax,” The Washington Post’s “Daily Dose” Blog, 9/15/09)

Senate Dems’ Bill Raises $121.1 Billion In New Taxes Prescription Drugs And Medical Devices. “The three provisions are the imposition of an annual fee on manufacturers and importers of branded drugs, the imposition of an annual fee on manufacturers and importers of certain medical devices, and the imposition of an annual fee on health insurance providers.” (Thomas Barthold, “Revenue Estimates,” Joint Committee On Taxation Memorandum, 10/6/09)

• That Will Raise Costs For Health Care Services. “The medical-device industry is organizing companies that make everything from CT scans to contact lenses to fight a proposed $4 billion annual fee on device makers, arguing that companies across the board could get hit with the fees. And the industry is trying to rally companies that make even mundane items like condoms and Q-tips to fight the fee, as well. ... ‘They’re going to get walloped upside the head with a new tax during a struggling economy,’ he [AdvaMed chief lobbyist Brett Loper] said. ‘Hopefully, we can convince enough people that a medical products tax will only increase the costs.’” (Chris Frates and Carrie Budoff Brown, “Medical-Device Makers Launch Blitz,” Politico, 9/14/09)

Senate Dems’ Bill Raises $110 Billion In Income Taxes On Individuals And Small Businesses. (Congressional Budget Office, “Letter to Chairman Max Baucus,” 10/7/09)

• Including $23 Billion In Job-Killing Taxes On Employers Who Can’t Afford Health Insurance For Their Employees. “[E]mployers who do not offer ‘affordable’ coverage to employees would have to help pay the cost of such benefits for their low-income workers ... The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal ‘could unintentionally discourage the hiring of lower-income people,’ by adding a new ‘health surcharge’ to the cost of employing them.” (Congressional Budget Office, “Letter to Chairman Max Baucus,” 10/7/09; Jeff Zeleny and Robert Pear, “Obama Says Government Health Coverage Plan Would Not Hurt Private Insurers,” The New York Times, 6/23/09)

And $4 Billion In Taxes On Middle-Class Families Who Can’t Afford Insurance. Joint Committee On Taxation Chief Of Staff Thomas Barthold: “Senator Grassley, the penalty proposed in the Chairman’s mark, is as you observed, it’s structured as a penalty excise tax, we have other penalty excise taxes in the internal revenue code ... We have not done a combined distribution analyses across income to specifically answer your question but to the extent that yes we think that some people would be subject to the penalty excise tax when everything shakes out we would expect that some would have incomes less than $200,000 dollars.” (George Stephanopoulos, “Mandate Or Tax? Grassley V. Baucus,” ABC News’s “George’s Bottom Line” Blog, 9/22/09)