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1 Gerald Prante, Illustration of the President's Health Care Tax Initiative 1 (2007)

handle is hein.taxfoundation/ffhfxz0001 and id is 1 raw text is: FOUNDATION: January 25, 2007 Illustration of the President's Health Care Tax Initiative by Gerald Prante Fiscal Fact No. 75 Now that more details of the President's health care proposal have emerged, we can look more closely at how different groups of Americans will be impacted. As discussed in Tax Foundation Fiscal Fact No. 74, President to Propose Large Tax Deduction to Spur Health Insurance Purchases, 53 percent of uninsured Americans have no federal income tax liability. Therefore, the President was forced to allow the deduction for purchasing health insurance to reduce payroll tax liability; this is the only way to let the 53 percent with no income tax liability benefit from the deduction. Following is an illustration of how the new Bush health care plan proposed during the State of the union Address would affect four types of families. First, we present a family of four with two children that earns $80,000 per year in wage and salary income and receives $10,000 in employer-provided health insurance. Next, we show that same family, but we assume it receives $20,000 in employer-provided health insurance. Third, we show the impact on a low-income family with a single mother of two children who earns $25,000 in wage and salary income and currently has no health insurance. Finally, we show a single person living by himself earning $50,000 and currently uninsured. We assume all families currently take the standard deduction and receive the child tax credit (if applicable), and no other credits. Also, we calculate the Earned Income Tax Credit (EITC) and the additional child tax credit for the low-income single mother.