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Katie Sanders
By Katie Sanders July 16, 2012

Marco Rubio says $800 billion in taxes in health care law do not "discriminate between rich and poor"

It’s not news that Republicans predict the health care overhaul will spell devastation for business. But Sen. Marco Rubio, R-Fla., is taking it further. He warns the law will "hurt everyone."

"Obamacare is bad policy that adds around $800 billion of taxes on the American people," he wrote in a July 8 opinion-editorial in the Orlando Sentinel. "It does not discriminate between rich and poor. It hurts everyone."

We wondered where he got his $800 billion tax total, as well as the validity of the idea that the law does not "discriminate between rich and poor." So we decided to check it out.

$800 billion in new taxes?

Rubio pulled the figure from a 2011 report by the nonpartisan Congressional Research Office and Joint Committee on Taxation. It was commissioned by Republican House Speaker John Boehner to estimate the cost of repealing the health care law.

Repealing the law would result in $813 billion in lost revenues for the government between 2012 and 2021, the report found.

Where do those come from? To pay for the overhaul, the federal government created a series of  new revenue sources -- some are clearly taxes, some are changes to tax rules -- that include the controversial tax penalty for people who do not have their own health insurance and a tax on indoor tanning. (We looked at more than a dozen revenue sources and whether they were actually taxes in a January PolitiFact report.)

Whether each revenue source is technically a tax does not matter to Rubio. Here, he equates all money raised from Americans as a tax.

Also, Rubio’s number doesn’t account for the tax breaks that are in the law, especially the tax credits that some people of modest means will receive to help them buy insurance.

We consulted several experts, who disagreed on the best way to account for the law’s tax increases.

A couple experts said Rubio’s $800 billion figure is valid, even if it is out of date and does not account for billions in tax credits.

"It's just stating what the tax bill is," said Joseph Henchman, of the business-backed Tax Policy Foundation. "Most people don't expect you to net out benefits."

Not so fast, said Chapin White, a former CBO staffer who is now a senior health researcher at the Center for Studying Health System Change, a health research group founded by the Robert Wood Johnson Foundation. White said it’s important to subtract the law’s $519 billion in refundable tax credits and subsidies for health insurance, among other things.

All told, the more appropriate net "tax increase" over 10 years is about $20 billion, he said.

No difference between rich and poor?

Rubio spokesman Alex Conant declined to elaborate on what Rubio meant when he said the law does not "discriminate between rich and poor," saying he did not want to parse his words.

The best we can infer from Rubio’s claim and the context around it is the health care law affects the rich and the poor the same, tax-wise.

And that’s off base.

The point of the law was to expand health coverage to those who don’t have it -- including people who don't have jobs or have low income. To make that happen, the law provides tax credits to low- and moderate-income families, and it includes more taxes on the wealthy and an individual mandate requiring most Americans to obtain health insurance.

Two of the biggest taxes in the law are geared toward taxpayers with higher incomes. People whose incomes exceed $200,000 ($250,000 for couples filing jointly) will pay 0.9 percentage point more on Medicare payroll taxes in 2013. These people would also pay a new 3.8 percent tax on investment income.  

Plus, the law includes a 40 percent excise tax on people who have high-premium health insurance plans starting in 2018. Also known as "Cadillac plans," these premiums are usually obtained by people in the middle- to upper- class, and are expected to bring in $111 billion through 2021.

Democrats, of course, take a different view than the Republicans. The Democrat-controlled U.S. Senate Finance Committee released a compilation of tax breaks available to individuals, middle-class families, and small businesses, thanks to the law. The total? $828 billion in "tax cuts" over 10 years.

Most of that comes from tax credits and subsidies for families with low- to moderate-level incomes. The law creates exchanges through which consumers can shop for the best plans. People who qualify can supplement the cost of an insurance plan with a government subsidy, which will be based on income.

A break is also extended to certain small businesses with low-income workers who employ fewer than 50 people and offer health insurance to them.

Now for the individual mandate, which requires most everyone to have health insurance in 2014 or pay a penalty to the Internal Revenue Service.

You could argue it doesn’t discriminate between rich and poor because it applies to most everyone. But the penalty is linked to income.

Individuals who go uninsured and who aren't exempt from the mandate will have to pay an annual penalty of at least $95 per adult in 2014, rising to $325 in 2015 and $695 in 2016. After 2016, the amount would be indexed to inflation and could be higher -- 2.5 percent of household income, if that’s greater than the amount written into the law.

The nonpartisan federal researchers at CBO and JCT have estimated that about 4 million uninsured Americans, including dependents, will have to pay up in 2016, amounting to $4 billion in revenue per year from 2017 to 2019.

Probably most relevant to our fact-check is the fact that the mandate includes a hardship exemption for people who cannot afford to buy health insurance.

Our ruling

Rubio cherry-picks the highest number he can find -- $800 billion in new taxes -- to garner opposition to the recently upheld health care law. He doesn’t tell readers anything more about the figure, including the fact that these "taxes" would be garnered over 10 years.

His statement also indicates that rich and poor people will feel the effects of the law’s various revenue-raising provisions with the same degree of pain. But that’s not true. The law taxes wealthier Americans to a greater degree to provide more services for the poor.

We rate this False.

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Our Sources

Orlando Sentinel, "Marco Rubio: Obamacare’s taxes punish individuals, small businesses," July 8, 2012

NPR’s "Shots" health blog, "Answers To Your Questions About The Health Care Overhaul Law," March 22, 2012

PolitiFact, "Mitt Romney says Barack Obama has raised taxes 19 times," Jan. 11, 2012

PolitiFact, "Facebook post says "75 percent of the Obamacare tax falls on the middle class," July 9, 2012

PolitiFact, "Mitt Romney says health care law’s penalty is a tax," July 5, 2012

Email interviews with Alex Conant, Rubio spokesman, July 9-10, 2012

Email interview with Nick Papas, White House spokesman, July 10, 2012

Congressional Budget Office, Analysis of implementing H.R. 2, the Repealing the Job-Killing Health Care Law Act, Feb. 18, 2011

Email interview with Joseph Henchman, Tax Policy Foundation vice president of legal and state projects, July 11, 2012

Tax Foundation blog, "Taxing the Uninsured," June 29, 2012

Interview with Chapin White, senior health researcher at the Center for Studying Health System Change, July 10, 2012

U.S. Senate Committee on Finance, "The Affordable Care Act: More than $800 billion in tax cuts," June 29, 2012

U.S. House Committee on Ways and Means, "Supreme Court's Health Law Decision Leaves in Place 21 Tax Hikes Costing Taxpayers More Than $675 Billion," June 28, 2012

Joint Committee on Taxation, memo providing estimates for repealing the health care law, June 15, 2012

E-mail interview with Joseph Rosenberg, Urban-Brookings Tax Policy Center research associate, July 11, 2012

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Marco Rubio says $800 billion in taxes in health care law do not "discriminate between rich and poor"

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