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Opponents of President Barack Obama’s signature health care legislation are rushing to turn his recent victory before the U.S. Supreme Court into a defeat at the ballot box this November.
The court ruled June 28 that the law’s requirement that certain people buy health insurance is constitutional under federal taxing powers.
The decision gave Republicans a chance to repeat a claim that the bill is a tax of historic proportions.
U.S. Rep. Phil Gingrey of Marietta joined the chorus the day the court released its decision to uphold the mandate during an interview on American Public Media’s radio show "Marketplace." It airs on WABE-FM, Atlanta’s local National Public Radio station.
Gingrey said he wouldn’t care to have a beer with Supreme Court Justice John Roberts.
"I'd like to pour one on his head," Gingrey quipped. He also complained that the bill is a whopper of a tax.
"This indeed is the largest tax [increase] in the history of our country," Gingrey said.
Politicians and pundits have been using different versions of this talking point for years, and we’ve often ruled it False or worse.
The latest such statement PolitiFact rated came from conservative talk show host Rush Limbaugh, who earned a Pants on Fire for saying "Obamacare is ... the largest tax increase in the history of the world."
It’s not even the largest in American history, PolitiFact ruled.
PolitiFact Georgia contacted Gingrey’s office for answers.
Before we evaluate his response, let’s review the reasoning behind our prior rulings.
Hold tight. It’s complicated.
The federal Joint Committee on Taxation, a nonpartisan committee of Congress with a professional staff of economists, attorneys and accountants, broke down the tax impact of the health care law from 2010 to 2019.
Over the next 10 years, the plan would raise hundreds of billions of dollars through measures such as a Medicare payroll tax increase, new taxes on certain medical devices and so-called "Cadillac" health care plans, and an annual fee on health insurance providers.
The Joint Committee on Taxation estimates the health care law will bring in more than $437.8 billion by 2019. The nonpartisan Congressional Budget Office estimated the additional revenue coming in to the government to be $525 billion between now and 2019.
Is this the biggest tax increase in American history?
We turned to a method employed by Jerry Tempalski, an analyst in the Office of Tax Analysis with the U.S. Department of the Treasury. In 2006, Tempalski tried to determine the relative impact of major tax revenue bills from 1940 to 2006.
Tempalski used revenue estimates from Treasury and the Joint Committee on Taxation. He measured the impact of the increase by calculating the increase in revenue as a percentage of the U.S.’ gross domestic product. He typically used estimates from immediately after the laws went into effect.
Calculations for 1940-1967 should be viewed with some caution, he said, because revenue estimates are from different sources and are not completely consistent.
Here are Tempalski’s top five tax increases from 1940 to 2006:
1. Revenue Act of 1942: 5.04 percent of GDP
2. Revenue Act of 1961: 2.2 percent of GDP
3. Current Tax Payment Act of 1943: 1.13 percent of GDP
4. Revenue and Expenditure Control Act of 1968: 1.09 percent of GDP
5. Excess Profits Tax of 1950: 0.97 percent of GDP
The 2010 health care law wasn’t included in the list, so we calculated our own percent of GDP figure.
We chose 2019 as our base line. That’s when the bill’s tax provisions go into full effect.
The CBO estimates that in 2019, the government will see increased revenue of $104 billion, including the penalty paid by people who decline to buy health insurance.
We divided that number into the CBO’s gross domestic product projection for 2019, which is $21.164 trillion.
The result: 0.49 percent of total GDP. The health care bill doesn’t even crack Tempalski’s top five.
Gingrey spokeswoman Jen Talaber countered that the CBO’s 2010 long-term budget outlook says Obama’s health care law will increase revenue to 1.2 percent of GDP by 2035. That would catapult the tax to near the top of the list.
But that projection is for more than two decades from now. The accuracy of revenue and GDP projections plummet the further into the future they go.
Second, Gingrey’s number is not comparable to those in Tempalski’s ranking. Tempalski’s calculation compares revenue estimates for years immediately after the new tax law goes into effect, not a generation out.
In addition, Gingrey cherry-picks favorable statistics while ignoring the most up-to-date information. The CBO’s 2012 projections show Obama’s health care bill will increase tax revenue by far less -- 0.8 percent.
Make no mistake about it -- this is still a huge tax increase. And there are a lot of unknowns as the program is implemented.
But Gingrey went further than that. He said it is the "largest tax" increase in the nation’s history.
PolitiFact ruled previously that Obama’s health care bill is not the largest tax increase in U.S. history. That ruling stands.
Gingrey earns a False.
Marketplace, "Rep. Phillip Gingrey: 'Shocked' by health care ruling," June 28, 2012
PolitiFact, "Limbaugh, GOP have it wrong: Health care law is not the largest tax increase ever," June 28, 2012
U.S. Department of the Treasury, OTA Working Paper 81, "Revenue Effects of Major Tax Bills," September 2006
Website of U.S. Sen. Jim DeMint, "Ezra Klein's Incomplete & Misleading Claims on Obamacare Taxes," July 2, 2012
Congressional Budget Office, "The 2012 Long-Term Budget Outlook," June 2012
Email interview, Jen Talaber, spokeswoman, U.S. Rep. Phil Gingrey, July 3, 2012
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