Taxes & Healthcare
Congresswoman Nancy Pelosi (D–CA) claims that Republicans have “irresponsibly showered the wealthy with tax breaks” while “forcing working families to pay the bill through cuts to their health care.”
IN FACT, the effective federal tax rates paid by the wealthy have been roughly level for more than 4 decades, while the portion of the U.S. economy consumed by federal health spending has grown by 3.3 times. Here are the specifics:
- Unlike the incomplete and misleading tax rates reported by the media and politicians, the Congressional Budget Office publishes data on the federal tax rates of different income groups based on their actual taxes paid (not marginal tax rates) while accounting for nearly all forms of income and all types of taxes, such as wages, salaries, capital gains, dividends, pensions, health benefits, payroll taxes, excise taxes, corporate taxes, hidden taxes, and write-offs (aka preferences).
- Over the full span of CBO data — which currently extends from 1979 to 2022 — the effective federal tax rates of U.S. households with the highest 1% of incomes have averaged from 29% to 32% during every decade with no upward or downward trend.
- Over that same period, federal revenues in every decade have averaged 17% to 19% of the U.S. economy with no upward or downward trend.
- Although Republicans and Democrats enacted numerous “tax cuts” during those decades, most of them were actually “tax evens” which correct for “bracket creep” that consumes an ever-growing share of people’s incomes over time due to tax laws that aren’t indexed for inflation or wage growth.
- Similarly, the Reagan tax cuts of 1986 — which lowered the top personal income tax bracket from 50% to 28% — eliminated so many tax preferences that the richest 20% of households paid higher tax rates after the law was enacted.
- In contrast to the steady federal tax rates and revenues of the past 4 decades, federal government spending on health and healthcare programs has risen from 2% of the U.S. economy in 1979 to 7% in 2022, or by 3.3 times.
- In addition to healthcare price inflation and technological innovations that allow “providers to diagnose and treat illnesses in ways that were previously impossible,” the surge in federal health spending is due to politicians enacting an array of new handouts.
- In 1997, Congress and Democrat President Bill Clinton passed a law that created the Children’s Health Insurance Program, which now covers 9.2 million children.
- In 2003, Congressional Republicans and Republican President George W. Bush passed a bill adding a prescription drug benefit to the Medicare program that was projected to add $395 billion to the deficit over the following 10 years, while Democrats voted for a competing bill that would have cost 2.4 times more than that.
- In 2010, Congressional Democrats and Democrat President Barack Obama passed the Affordable Care Act that expanded Medicaid.
- Due to Obamacare and other factors, the portion of the U.S. population receiving Medicaid rose from 8% in 1979 to 28% in 2022, while the poverty rate stayed roughly level at 13% ± 2 points.
- The Affordable Care Act also created taxpayer-subsidized exchanges to sell health insurance to people with incomes up to four times the federal poverty guidelines.
- In 2021, Congressional Democrats and President Biden enacted a law that significantly increased Obamacare subsidies in 2021 and 2022 as a “temporary” measure to “deliver immediate relief” during the Covid-19 pandemic.
- In 2022, the Democrats and Biden extended the enhanced Obamacare subsidies for another three years in the Inflation Reduction Act.
- Under those enhanced subsidies, Obamacare recipients paid an average of just $74 per month for health insurance, and taxpayers provided $14,680 per year in welfare to 60-year-old couples with incomes of $125,000 and unlimited assets.
- In the Inflation Reduction Act, the Democrats and Biden also made changes to Medicare prescription drug benefits that will cost taxpayers about $500 billion over the next 10 years.
- Because the general eligibility age for benefits Medicare benefits isn’t indexed to life expectancy, the average time that people receive Medicare benefits has risen by about 35% since the program was created in 1965.
- Offsetting some of the growth in federal healthcare spending, Congressional Republicans and President Trump passed the One Big Beautiful Bill in 2025, which cut Medicaid and Obamacare benefits to illegal immigrants, other aliens, fraudsters, and able-bodied adults who don’t work at least 20 hours per week, care for children, or get an education.
- Bernie Sanders called those reforms “savage,” Jon Ossoff declared that they “gutted” Medicaid, and Elizabeth Warren alleged that they will cause “little babies” to “lose their health care.”
