November 14, 2003

November 14, 2003 | WebMemo on Health Care

State-By-State Tax Increase from Medicare Drug Benefit

Taxpayers would see a $41 billion tax increase in 2001 dollars if Congress passes the proposed Medicare prescription drug legislation and raises taxes to pay for this massive new program, as detailed in the budget resolution. This tax increase assumes that Congress would raise federal income taxes by enough to pay for the new drug entitlement. ( Full state-by-state table.)


According to Heritage's Center for Data Analysis the median amount of new taxes will be:

  • $319 for joint files
  • $93 for head of household
  • $128 for single filers
  • $186 for all filers

The most populous states will experience the largest tax increases:

State Tax Increase (in millions)
California $5,340
New York $3,150
Texas $2,950
Florida $2,070
Pennsylvania $1,860
Illinois $1,820
New Jersey $1,730
Ohio $1,520

See the full table of state-by-state increases.

Another chart, from the recent Backgrounder, New Medicare Drug Entitlement's Huge New Tax on Working Americans, by Brian Riedl and Bill Beach, shows that the proposed drug benefit will cost the average household $1,125 each year in new taxes by 2030.

Medicare Chart


Adding this into Medicare's current projected shortfall, the total becomes:

  • $1,168 per household in 2010,
  • $2,262 per household in 2020, and
  • $3,980 per household in 2030.

About the Author

Rea S. Hederman, Jr. Director, Center for Data Analysis and Lazof Family Fellow
Center for Data Analysis

Related Issues: Health Care