NBC's Costello butchers health care bill's tax on wealthy
NBC News correspondent Tom Costello falsely reported that the health care income surtax in the House tri-committee bill could mean a surcharge of $7,000 for those "with a taxable income of more than $350,000" and a surcharge of $15,000 for those "earning $500,000." In fact, since the surcharge rates established in the bill would apply only to the portion of a household's income that exceeds $350,000 or $500,000, respectively, families making between $350,000 and $500,000 would not pay more than $1,500, and families making between $500,000 and $1 million would not pay more than $9,000.
From the August 18 edition of NBC's Nightly News:
COSTELLO: Congress had considered raising taxes on the health care benefits that many Americans already get from their employers tax-free, but already that proposal is virtually dead on arrival at the White House.
PRESIDENT OBAMA [video clip]: When I was campaigning, I made a promise that I would not raise your taxes if you made $250,000 a year or less.
COSTELLO: So the president has proposed raising income taxes on the wealthiest 1 percent of Americans, all to pay for health care. On families or businesses with a taxable income of more than $350,000, that could mean a tax surcharge of up to $7,000. On families or businesses earning $500,000, a $15,000 tax surcharge. And on families with incomes of more than a million dollars, it could mean a $54,000 increase.
But Republicans, and some Democrats, don't like that idea, saying it unfairly targets wealthier families and could force some small businesses to lay off employees. So now the House is considering raising taxes only on families making more than a million dollars.
Health care surtax in House bill applies only to income dollars more than $350,000 for households
From the House tri-committee health care reform bill:
''SEC. 59C. SURCHARGE ON HIGH INCOME INDIVIDUALS.
''(a) GENERAL RULE.-In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to-
''(1) 1 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $350,000 but does not exceed $500,000,
''(2) 1.5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $500,000 but does not exceed $1,000,000, and
''(3) 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000.
''(b) TAXPAYERS NOT MAKING A JOINT RETURN.-In the case of any taxpayer other than a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), subsection (a) shall be applied by substituting for each of the dollar amounts therein (after any increase determined under subsection (e)) a dollar amount equal to-
''(1) 50 percent of the dollar amount so in effect in the case of a married individual filing a separate return, and
''(2) 80 percent of the dollar amount so in effect in any other case.
Households earning $350K-$500K pay $0-$1,500. Households earning $500K-$1 million pay $1,500-$9,000
From the House Ways and Means Committee's description of "How the Health Care Surcharge Works":
NYT report explains how surcharge works. The New York Times reported that under the proposal, "Starting in 2011, a family making $500,000 would have to pay $1,500 in additional income tax to help subsidize coverage for the uninsured. A family making $1 million would have to pay $9,000. ... The surtax would apply to any adjusted gross income exceeding $280,000 a year for an individual and $350,000 for a couple filing a joint return. The tax rates would range from 1 percent to 5.4 percent." [New York Times, 7/14/09]
Costello's calculations still wrong even when assuming potential rate increase
Bill includes surcharge rate increase or decrease depending on level of savings from reform. From the Joint Committee on Taxation's description of the proposal:
The proposal directs the Director of the Office of Management and Budget ("OMB") to determine before December 1, 2012 whether the Federal health reform savings under division B of this act for the period beginning October 1, 2009 and ending before October 1, 2019, exceed the savings estimated by the Congressional Budget Office ("CBO"). If these savings do not exceed $150 billion dollars, then the 1 percent and 1.5 percent rates will become 2 percent and 3 percent, respectively, for taxable years beginning after December 31, 2012. If the Director of OMB determines these savings exceed the CBO estimate by more than $150 billion dollars for the period, then the 1 percent and 1.5 percent rates shall not increase after December 31, 2012. If Director of OMB determines these savings exceed the CBO estimate by more than $175 billion dollars for the period, then neither the 1 percent nor 1.5 percent rates shall apply after December 31, 2012."
Assuming a rate increase, households making $500,000 would pay a maximum surcharge of $3,000. Contrary to Costello's claim that households "earning $500,000" would pay a "$15,000 tax surcharge," they would pay no more than $1,500 under the standard rate and no more than $3,000 if the rate increased in 2013. Households making $1 million would pay no more than $18,000 if the rate increased in 2013.
If the MEDIA was doing their job, almost half of the public would not believe in this mythical health bill of death. They portray it as a "he said, she said" argument instead of reporting the facts about what is in the bill. They also focus on the angry protestors without pointing out that most of their rants are about bogus things not contained in the bill. They just show the angry "healther" rant with no context.
Horseshoe crabs can crunch the numbers. Why can't this tool?
Randy