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Rangel Health Care Surtax Would Push Top Tax Rates Over 50% in 24 States

Three-Tiered Surtax Targets Couples Earning More Than $350,000, Singles Over $280,000

Washington, DC- An updated Tax Foundation analysis shows that 24 states would see top tax rates exceed 50% under a health care funding plan introduced over the weekend by House Ways & Means Committee Chairman Charles Rangel (D-NY).

The latest proposal being debated on Capitol Hill would impose a surtax of 1 percent on married couples with adjusted gross incomes (AGI) between $350,000 and $500,000 (individuals with incomes between $280,000 and $400,000); 1.5 percent on couples with incomes between $500,000 and $1 million (singles earning between $400,000 and $800,000); and 3 percent on couples earning more than $1 million (singles beyond $800,000).

The Tax Foundation released an initial report Friday based on another plan that had been floated that included a 4 percent surtax.

"Nearly half of all states will face top tax rates over 50%," Tax Foundation President Scott Hodge said. "That means government would be taking more than half of every additional dollar from high-income taxpayers. The lowest top tax rate would be about 45% - and that's in the nine states that don't tax wages."

Tax Foundation Fiscal Fact No. 176, "If Health Surtax Is 3 Percent, Taxpayers in 24 States Would Pay a Top Tax Rate Over 50%," may be found online at

The hardest-hit states would be Oregon (55.2%), Hawaii (54.9%), New Jersey (54.7%), New York (54.6%), California (54.4%), Rhode Island (53.9%), Vermont (53.4%), Maryland (53.3%), Minnesota (52.0%), and Idaho (52.0%). Washington, DC, and New York City both would see their top effective marginal rates rise to 52.6%. The effective marginal tax rate takes into consideration deductions and adjustments in order to present a truer measure of an individual's rate.

Top tax rates in the other 26 states range from 44.9% to 50%.

Tying federal health care expansion to unstable sources of funding such as these so-called 'millionaires' taxes' is a recipe for revenue disaster," Hodge said. "As we have seen time and again, boom-time revenue explosions inevitably give way to budget-shortfall busts."

The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.


Fiscal Fact No. 176 can be found


To schedule an interview, please contact Tax Foundation Manager of Media Relations Natasha Altamirano at (202) 464-5102 or This email address is being protected from spambots. You need JavaScript enabled to view it. .

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