Since the Affordable Care Act (aka Obamacare) became law, many have decried its terms and conditions, as well as how it negatively affects so many Americans and business owners. Republican lawmakers have tried unsuccessfully to repeal it since its inception. However, that could all be about to change now that Donald Trump has won the White House and Republicans have maintained control of the Senate and Congress. It’s no secret that repealing Obamacare is reportedly one of the first orders of business for the new administration as soon as it takes office in January. So how will that end up affecting our country, especially when it comes to the financial side? And specifically, what would it mean for millionaires and billionaires?
Wealthy Stand to Gain the Most
First off, if Obamacare is repealed, more than 20 million people could end up without any health benefits. However, for many, repealing Obamacare would be a boon for their bottom line, especially for many of the nation’s wealthiest taxpayers. So why do the wealthy stand to gain so much if the Affordable Care Act is repealed? For starters, it’s the wealthy that are really paying for everyone else’s health insurance. The reason for this is that the ACA includes a surcharge tax for all households that make more than $250,000 a year or single individuals that earn more than $200,000 a year. Those thresholds do not change for inflation, either, which means each year the number of total taxpayers falling into these categories is likely to rise. Individual income taxes are the chief source of income used to help pay for insurance for millions of low-income Americans.
Fewer Taxes on Capital Gains
The other major factor is the Net Investment Income surcharge tax, which is applied to capital gains. Again, this affects the wealthy more than anyone else, because many of the country’s highest earners make a large portion of their money in capital gains. The current surcharge is 3.8 percent. Which is added to the taxpayer’s capital gains rate, which can already be as much as 20 percent for those in the highest tax bracket? Therefore, if republican lawmakers, including president-elect Trump, move forward with their plan to repeal the law, the nation’s top earners, especially the top 1 percent, stand to save billions in taxes every year. In fact, according to the Congressional Budget Office, the government stands to lose about $346 billion in tax revenue in the next 10 years if the ACA is repealed.
How Will Lawmakers Replace the Income?
No doubt, the nation’s wealthiest individuals will enjoy keeping all that money in their own pockets, but it does beg the question, where will republican lawmakers come up with the cash to replace it? That will be up to the new administration to figure out, but for the time being, many of the country’s top earners are about to be worth a lot more if and when Obamacare is repealed when Trump takes office.