How the GOP health care bills help the rich

The Senate GOP health care bill explained

If Republican efforts to repeal along with replace Obamacare are successful, one of the biggest winners could be the wealthy.

The Senate’s bill — released in which week — differs in key ways coming from the House-passed edition. yet proposals eliminate the taxes imposed on high-income Americans to help pay for an expansion of health benefits under the Affordable Care Act. The legislation also could let people contribute more to certain tax-advantaged accounts.

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At the same time, both bills are anticipated to disproportionately hurt lower income households by reducing funding for Medicaid along with offering less generous subsidies to buy health insurance.

Here are the key provisions under the Senate along with House health bills in which could benefit the highest-income households.

Eliminate Medicare surtax on wages

High-income earners currently pay the 1.45% Medicare payroll tax on wages up to $0,000 ($250,000 if married). yet then they pay an extra 0.9 percentage points — or 2.35% — on wages above those levels.

Under both the Senate along with House bills, in which surcharge goes away in 2023.

Get rid of Medicare tax on investments

In addition to the surtax on wages, high-income earners generating more than $0,000 ($250,000 if married filing jointly) are subject to a 3.8% Medicare tax on a portion of their investment income, which will be determined by formula. Investment income includes money coming from capital gains, dividends, interest, rental income along with annuities.

Related: Who gets hurt along with who gets helped by the Senate health care bill

The Senate along with House bills could eliminate in which so-called net investment income tax along with make the repeal retroactive to Jan. 1, 2017. In some other words, if you sell — or have already sold — any stocks in which year in which have big long-term gains, you could not be subject to the surtax when you fill out your 2017 federal tax return next spring. You could pay a 20% tax rate on all of your gains instead of 23.8% on some of them.

Effectively, generating in which retroactive simply rewards people who happened to have sold their stock already.

“You’re not affecting behavior at all. in which’s just a tax cut for high-income people,” said Mark Mazur, director of the Tax Policy Center.

Related: What’s inside the Senate Republican health care bill

Make tax-advantaged accounts for health costs more generous

Today, individuals can save up to $3,400 along with families can save up to $6,750 tax free in a Health Savings Account. The Senate along with House bills could raise in which limit to the annual out-of-pocket maximum for high-deductible plans. For 2018, in which could be $6,650 for individuals along with $13,300 for families.

The legislation also could eliminate the caps on contributions to tax-deductible flexible spending accounts. Right right now, employed individuals may each save up to $2,0 a year, so a two-earner couple can put away $5,0.

Raising or eliminating contribution limits on tax-advantaged accounts disproportionately benefits the highest-income Americans because they’re from the best position to sock away more money.

The bills could also end the Obamacare prohibition on paying for over-the-counter medications with funds coming from tax-advantaged health accounts. along with they reduce the penalty coming from 20% to 10% — which was the pre-Obamacare levy — if funds coming from an HSA are used for non-medical purposes. These provisions could take effect in 2018.

sy88pgw (brand new York) First published June 23, 2017: 3:37 PM ET


How the GOP health care bills help the rich

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