House Health Care Bill Raises Revenue from Non-Health-Care Sources
The Facts
On November 7, 2009, the House of Representatives passed H.R. 3962, the Affordable Health Care For America Act. Unlike the Senate Finance bill, which would fund reform largely with excise taxes on “Cadillac” insurance plans and on various health care sectors, the House bill would raise much of its new revenue—$739 billion over 10 years—through tax law changes largely unrelated to health care. Notable provisions include the following:
- Imposing a 5.4 percent surtax on adjusted gross income of individuals earning over $500,000 ($1 million for joint filers), raising $460.5 billion over the next decade
- Excluding “black liquor” from the biofuel producer tax credit, saving $23.9 billion over the next seven years
- Requiring reporting to the Internal Revenue Service of most business-to-business payments over $600, a provision that is also included in the Senate Finance bill and is expected to increase revenues by $17.1 billion over 10 years
- Limiting treaty benefits for some foreign multinationals, raising $7.5 billion over the next decade
- Repealing the planned reform of interest allocation by multinationals, raising $6.0 billion over the next decade
- Codifying and tightening the common-law economic substance doctrine, with corresponding increase in penalties, raising $5.7 billion over 10 years
The House bill would also raise revenue through several health-care-related tax provisions that would affect businesses across sectors:
- A new payroll tax on employers that do not offer coverage, raising $135 billion over 10 years
- Imposing limits and higher penalties on health flexible spending accounts, raising nearly $20 billion over the next decade
What’s at Stake
Businesses in sectors far removed from health care may experience adverse tax changes and new reporting burdens. As the focus now moves to the Senate, additional changes, possibly including new revenue raising proposals, are likely.
Steps to Consider
Entities outside the health care sector should monitor the progress of the health reform debate for tax changes having an impact beyond their employees’ health care.
