Tuesday, March 23, 2010

Crapo Motion to Commit on President’s Promises on Middle Class Taxes

Below is my colleague Jon Lieber’s analysis of the Crapo motion to commit regarding the President’s promise not to increase taxes on individuals making less than $250,000…
Senator Crapo just spoke on a motion to commit he is planning to offer.  This motion will commit the health care bill to the Finance Committee with instructions to ensure that the bill will result in no tax increase for anyone earning under $200,000/$250,000 a year.
• President Obama made a “firm pledge” on the campaign trail that single Americans earning less than $200,000 a year and families earning less than $250,000 wouldn’t see their taxes increase “a single dime.”  He promised this for all taxes, saying, “not your income taxes, not your payroll taxes, not your capital gains taxes.”
o “I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase.  Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” – Candidate Barack Obama, Dover, New Hampshire, September 12, 2008
• Joint Committee on Taxation data show that more than 73 million American households with income of less than $200,000 will face a tax increase under this bill.  These taxes include:
o A new tax on medical devices that will be passed on to consumers,
o An un-indexed Medicare payroll tax and a new tax on investments that will be paid by more and more Americans under the original income threshold, just like the Alternative Minimum Tax,
o A new tax on health insurers that will result in rising premiums for businesses and individuals,
o A new tax on pharmaceuticals that will raise drug prices for everyone,
o New limitations on flexible spending arrangements, and
o An increase in the AGI floor for the medical expense deduction to 10 percent.
• All Republicans and five Democrats voted for such a motion during original consideration of the Senate health reform bill.
• During consideration of the Senate bill, Senator Baucus didn’t argue against this motion because the Senate health bill didn’t raise middle class taxes, but he claimed “The Crapo motion to commit is really an attempt to kill health care reform,” precisely because it relies on middle class tax increases to pay for it.
• According to the Joint Committee on Taxation, ONLY about 7% of Americans would actually receive the government subsidy for health insurance under the Senate-passed health care reform bill.
• The remaining 93% of Americans would receive NO tax benefit under the bill.
• Another way of looking at this is that for every 1 middle class family who would benefit from the subsidy for health insurance, 5 middle class families would pay more in taxes.