Republicans see healthcare taxes as boost in fiscal cliff fight

The Congressional Budget Office has projected that the healthcare law will raise $813 billion in new revenues over 10 years as part of its efforts to insure more Americans. In March 2011, the office also said that repealing the law would add $210 billion to the deficit over a decade.

{mosads}At the same time, the U.S. economy also faces both automatic spending cuts and a slew of tax increases around the end of the year, unless Congress acts. CBO has said that the United States could be dumped back into a recession if the fiscal cliff isn’t avoided.

Extending all of the Bush-era tax rates on income and capital gains and other provisions would cost trillions of dollars over a decade, according to nonpartisan projections.

Republicans have called for continuing all the current Bush rates, while Democrats have said they want them to expire for the wealthiest taxpayers.

“I think the fiscal cliff becomes a jobs cliff,” Camp said, when asked about the impact of the healthcare law taxes. “Because if we have almost $5 trillion in taxes layered over the economy, I think it means it’s going to be harder for employers to hire people.”

In upholding the healthcare law this week, the Supreme Court found that the individual insurance mandate was constitutional as a tax, something Republicans have latched on to.

Sen. Orrin Hatch (Utah), the ranking Republican at Senate Finance, said that Republicans would also make the point that wealthier taxpayers largely wouldn’t have to worry about the penalty from the mandate.

“That’ll be just one of the points we’ll make,” Hatch told The Hill.

The law also installs a 3.8 percent tax on capital gains and other so-called “unearned” income for wealthier taxpayers, as well as a 0.9 percent increase in Medicare payroll taxes.

But Democrats have said that the healthcare taxes wouldn’t play much of a role in either the debate over the Bush tax cuts or tax reform in general.

House Republicans, who have called for reducing top tax rates to 25 percent, have said that they will both vote to extend the Bush-era rates and to install a mechanism forcing reform in 2013.

But top GOP lawmakers have also not yet spelled out which tax credits and deductions they’d like to see scrapped in a reform process.

“I think the overriding issue remains … the need to get beyond the generalities,” Rep. Sandy Levin (Mich.), the top Democrat at House Ways and Means. “At this point we have nothing, except the Republicans put out a figure.”

Democrats at Senate Finance on Friday also issued a release asserting that middle-class families and small businesses would get more than $800 billion in tax cuts due to the law.