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Obamacare tax on wealthy sparks battle over fairness

Alan Ota, CQ-Roll Call on

Published in Health & Fitness

WASHINGTON -- Republicans and Democrats are squaring off in a fight over tax fairness as the GOP develops a timetable for repealing the 3.8 percent surtax on investment income under the health care overhaul.

GOP lawmakers have long argued for elimination of the surtax, or the net investment income tax, that applies to income such as interest, dividends and capital gains for individuals making more than $125,000 or couples earning more than $250,000.

The levy was created by the health care overhaul to help pay for subsidies and has been championed by Democrats as both a pillar of support for health care coverage and a key component of President Barack Obama's push to reduce income inequality in part by raising taxes on the wealthy.

Senate Finance Chairman Orrin G. Hatch, R-Utah, and Ways and Means Chairman Kevin Brady, R-Texas, said last week that no final decision had been made on the effective date for repeal of the surtax and others in the health care law. The ending of the surtax has been caught up in the broader discussion on how to repeal Obamacare.

"Most people would like to do it right up front," Hatch said, referring to repeal of the surtax.

But the Senate's top tax writer said Democratic opposition and procedural hurdles could slow down the process of repealing the surtax and other parts of the health care law. "With the way that Democrats are acting right now, it's going to be very difficult to get anything done that's substantial," Hatch said Friday.

Brady told reporters last week that House GOP leaders had not decided on a timetable for repealing Obamacare's tax cuts, including the surtax. "There's lots of discussions, no decisions. That's exactly where we are at," Brady said.

As the Senate began consideration of a fiscal 2017 budget resolution that would begin the process of dismantling the health care law, Democrats such as Tim Kaine of Virginia attacked the GOP for laying the groundwork to lower taxes on wealthy families at the expense of others.

Kaine, the 2016 Democratic nominee for vice president, said repeal of the investment surtax would amount to "a tax cut for the wealthiest financed by reductions of health care on the people that are most in need."

Ross Baker, a political scientist at Rutgers University, said Democratic complaints about tax fairness were likely to become a recurring theme in coming weeks as they begin to build their campaign platform for the 2018 elections.

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