Early this morning, the House Ways and Means committee approved a health care bill that would implement a surtax on the richest Americans as a way of financing reform. Conservatives have seized on reports calculating what the top tax rate would be if the House’s bill becomes law to lament the plight of the richest one percent of Americans who stand to have their taxes raised. For instance, Fox New’s Megyn Kelly lit into Sen. Bernie Sanders (I-VT) today, claiming that this “astronomical” top rate will lead us down a slippery slope to 70 or 80 percent tax rates. “Where do you draw the line? Does 60 percent not shock the conscience?” she asked. Watch it:
Clint Stretch, a tax expert at Deloitte Tax, was quoted by USA Today saying that the House bill will push tax rates for the very wealthiest to “levels never seen,” so I think this all needs to be put into perspective. As I pointed out yesterday, the surtax would have no impact on 98.7 percent of Americans. The one percent that are affected received $715 billion in tax breaks from the Bush tax cuts, while the surtax will raise $544 billion. So this isn’t even going to make up for the massive tax cuts that this tiny population received from Bush.
From 1950 to 1963, the top federal marginal income tax rate was 91 percent. It was in the 70’s until 1980 (albeit, different amounts of income were subject to the top rate). Even if the health care surtax is enacted, the Social Security payroll cap is lifted, and the Bush tax cuts expire in 2011, the rich would be paying 45 percent in federal income taxes. Meanwhile, after-tax income for the 95 percent of Americans who just received a tax cut courtesy of the stimulus package will not go up at all.