Today, the Wall Street Journal reported that Democrats, in light of the realization that they may have to go it alone on health care reform, are revisiting some of the tax increases that they had previously ruled out to placate Republicans, including limiting tax deductions for the richest Americans. “Bluntly…the idea of getting Republicans on board is becoming much more fantastical, so some ideas that were jettisoned for that reason are coming back,” said one Senate Democratic aide.
Never missing an opportunity to lament the plight of the richest one percent of Americans, Fox News went on the offensive against the tax hike proposals today, aided by a disingenuous calculation from its “Brain Room.” The network falsely claimed that the entirety of the $1 trillion cost of health care reform is going to paid for with tax hikes on the richest one percent of Americans, and used that notion to calculate a potential top income tax rate of 52.5 percent:
They’re talking about raising taxes on those who make more than $250,000 a year. Remember the CBO says it’s going to be $1 trillion over ten years. To get that $1 trillion, you would have to raise the tax rate for those making two-fifty plus from 35 percent to 52.5 percent, that is a 50 percent increase and that would give you the grand total of your $1 trillion. That’s a pretty hefty increase.
Rep. Marsha Blackburn (R-TN) did not disavow Fox of this notion, of course, but instead trotted out the thoroughly debunked line that the tax increases under consideration would be harmful to small businesses and job creation.
The Obama administration has been very consistent in its insistence on covering two-thirds of the cost of health care reform by eliminating inefficiencies in Medicare and cutting subsidies to insurance companies. The final one-third (from $300–600 billion) would come from tax increases. No one is proposing to put the cost of the entire reform effort onto the backs of the richest one percent.
Under President Obama’s budget, the effective tax rate on the richest one percent of Americans will be 32.4 percent (and would presumably go up a few points if the House’s plan to implement a surtax is adopted), which is decidedly less than 52.5 percent. This is simply more tax fearmongering from the team at Fox News.