Economist: Surtax on Wealthy Won't Fund Obamacare

Friday, 14 Aug 2009 08:08 PM

By Newsmax Staff

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The majority of Americans who fear their taxes would go up under the House Democrats’ proposed healthcare overhaul probably have good reason for their angst, suggests the senior economist for a nonpartisan, nonprofit educational organization.

“It does cost revenue, as the Congressional Budget Office numbers show,” Gerald Prante of the Tax Foundation tells Newsmax. “So you have to pay for that somehow, and the House bill actually includes a surtax that would be imposed on high-income taxpayers, those making above $350,000."

Would there be enough money raised from high-income earners, or would the Democratic plan necessitate a tax increase on the middle class?

See Video: Economist says surtax on wealthy won't fund Obamacare- Click Here Now

“In order to fund the plan that’s in the House bill, they’d have to go for revenues from somewhere else. They’d either have to raise taxes on people under that 350,000 threshold or make cuts to other spending, possibly Medicare cuts,” Prante says.

“They talked about reducing payments to Medicare providers. That’s one way that the Obama administration has talked about saving money to pay for health insurance.”

Prante notes both employers and employees would be subject to taxes to pay for mandatory health insurance, and individuals would face tax penalties for noncompliance.

“Generally, an employer with more than $250,000 in payroll would have to pay a tax up to 8 percent to the government, 8 percent of its payroll if it does not offer health insurance to its employees. That would be the employer tax. On the employee side, if someone doesn’t have health insurance and he makes a reasonable amount of money, then he has to pay 2.5 percent tax on his AGI (adjusted gross income) up to a certain amount into the national health insurance exchange because he doesn’t have health insurance.”

Prante points out that people who are self-employed or make their living as freelancers would be forced to buy their own health insurance, but could get some government assistance depending on their income.

“If he makes less than, say, 400 percent of the poverty level, then he could get subsidies from the government to purchase it through the health insurance exchange. Basically he’d have to purchase it through the exchange, which includes private companies or the public option, otherwise if he doesn’t buy it he has to pay a tax.”

See Video: Economist says surtax on wealthy won't fund Obamacare- Click Here Now

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