PROBLEM: Killing tax on the wealthy by shifting it to middle class workers could cause political problems. Solution?

...shift it to the dirt-poor instead!!

One of the most controversial aspects of the GOP's "Basement Bill" (aka the #DeplorableCareAct) until now is that it was supposed to replace the current funding sources for the ACA (including a 3.8% tax on investment income and 0.9% Medicare payroll tax for the wealthy) with a tax on 10% of the premiums paid by those receiving employer sponsored insurance...namely, tens of millions of middle-class workers.

As you may recall, according to the Center for American Progress's analysis of an earlier draft version a couple of weeks ago, the original idea was to replace most of the ACA's funding mechanisms (including over $800 billion in various taxes/penalties, $346 billion of which was supposed to come from the taxes on the wealthy noted above) with a) kicking the 15 million people currently on Medicaid via ACA expansion off their policies, and b) a single "Cadillac tax on steroids" which would tax 10% of employer-sponsored policies (at the time, CAP estimated around 38 million people would be hit with around a $700 average bill, though this has shfited around since then).

As the CAP analysis noted, not only would this have meant sticking 38 million mostly middle-class Americans with the bill (and screwing over 15 million low-income Americans) purely in order to line the pockets of the super-rich with an average $7 MILLION tax cut, but doing so would still leave a massive financing hole, not that this worried the GOP's pretty little heads.

However, this plan is causing a huge political uproar for obvious reasons, so it appears that the GOP has come up with a brilliant solution:

The latest version of the bill, dated March 6, also removes a controversial cap on the tax exemption for employer-sponsored health insurance. That provision almost certainly would have sparked opposition from business groups, and Democrats had already pilloried it as an unseemly tax on health benefits.


My initial conclusion was that the GOP had decided to "solve" this problem by simply not funding their plan at all. No tax on middle-class workers, presto, problem solved!

However, it's even worse than that; apparently they do plan on "funding" it after massively slashing non-expansion Medicaid by another $370 billion over the next decade. Of course, that includes a huge chunk of the funding for nursing homes for the middle class, but that's a whole other topic.

So, to summarize:

  • The ACA is funded in large part by taxing the wealthy and super-wealthy with a relatively small tax on their jaw-droppingly huge pile of wealth.
  • However, that would include tens of millions of voting middle-class people, so they've decided to simply screw tens of millions more poor people instead by slashing funding on non-ACA Medicaid even further still.

Now, I should caution that I'm not 100% certain about the funding change--it's possible that I'm misunderstanding something, and even if I have it correct today, that could change again by tomorrow (or even by this evening).

However, assuming I have it straight, this is like solving unemployment by hiring half the unemployed as death squads to massacre the other half. Presto, 0% unemployment in no time!

(sigh) Anyway, what are the other new changes? Well, according to Rachael Bade and Paul Demko..

The credits would begin phasing out at $75,000 for individuals and $150,000 for households. They would disappear completely for individuals who earn more than $215,000, with a cap of $290,000 for joint filers.

Demko had already reported that the GOP was planning on capping tax credits for the wealthy, so this is just putting hard income cut-off numbers on it. $75,000 is around 620% of the Federal Poverty Line for an individual; $215,000 is 17,800% of FPL. Of course, they're still giving $7,000,000 average tax cuts to the 400 wealthiest people in the country, so no one should exactly be staying up at night worrying about their plight. Put another way: Instead of getting a $7,004,000 windfall they have no need of, they'd "only" get $7,000,000 apiece. Gee, that's gotta smart.

The current plan also delays repealing many of Obamacare’s taxes until 2018, a year later than previously proposed. That will make up for at least some of the revenue lost by getting rid of the cap on the exclusion for employer-sponsored plans.

...Conservatives are likely to loathe the proposed delay in the repeal of many of Obamacare’s tax increases. Among the taxes that will remain on the books for another year are those on prescription and over-the-counter drugs, health savings accounts and tanning services.

...all of which were only supposed to make up around $87 billion over 10 years combined, or ~5% of the ACA's funding. But conservatives are still upset about even leaving those in place for one year.

Everything about this reeks of evil, pure and simple.