The Corner

More of Pelosi’s Millionaire Tax

On Wednesday, I wrote about the surtax of 5.4 percent on individuals making $500,000 and couples making more than $1 million that the House bill has in mind to pay for the high cost of the health-care reform. Among other things, I said that this surtax, which wouldn’t be indexed to inflation, reminded me of the Alternative Minimum Tax (AMT). It seems that I am not alone (here and here and here)

The Tax Policy Center has some numbers on the inflation creep that will inevitably occur if this tax is adopted:

TCP figures that just 400,000 taxpayers will pay that increase in 2011, less than three-tenths of one percent of all taxpayers. However, because the millionaire’s surtax is not adjusted for inflation (at least not yet), within a decade many more are scheduled to fall victim to the tax hike. By 2019, TPC figures nearly 800,000 would be in the bulls-eye, although that is still fewer than 1 percent of all taxpayers. Over the decade, the surtax is projected to raise nearly a half-trillion dollars. But because income subject to the surtax does not increase with inflation, annual tax revenues would grow from about $30 billion in 2011 to $70 billion in 2019.