That’s because the landmark health care law included two taxes levied specifically on higher-income folks. Those would disappear if Obamacare comes to an end.
As part of the Affordable Care Act, which was enacted 10 years ago, the wealthy were hit with a 3.8% tax on net investment income — including interest, dividends and capital gains — and a 0.9% Medicare tax on wages. Both are levied only on individuals with modified adjusted gross incomes above $200,000 and on married couples with incomes above $250,000. And both apply only to income above those thresholds.
Overturning the law would provide a substantial tax cut for the rich, said Gordon Mermin, senior research associate at the Tax Policy Center, a nonpartisan think tank.
If the net investment income tax disappeared, those in the top 1% would pay $20,250 less in federal taxes a year, on average, and see their after-tax income rise by 1.2%, according to the center’s calculations. Those in the top 0.1% would get a tax break of roughly $133,500 and enjoy a 1.8% boost in their after-tax income.
Meanwhile, ending the additional Medicare tax would mean a $7,120 tax cut for the top 1% and a roughly $26,500 reduction for the 0.1%. Both groups would see a bump in after-tax income of 0.4%.
Those in the top 1% have incomes above $788,000 and those in the top 0.1% earn more than $3.5 million a year, according to the center.
The court is expected to issue its decision in the first half of 2021.