Funding HCR: Reid Considering Raising Medicare Tax On Incomes Of 250K Or More?


Senate Majority Leader Harry Reid is considering a provision to raise payroll taxes for the wealthy as part of a health care bill, a Democratic source told CNN. [. . .] Reid is considering an increase in the Medicare tax for individuals with income exceeding $250,000. The current Medicare deduction is 1.4 percent of income. The idea is an alternative to the Senate Finance Committee's proposal to tax so-called "Cadillac" health insurance plans that offer broad coverage at a much higher-than-average price.

The House proposal would fund health care reform through an income surtax of 5.4% on income above $500k. The House proposal is utterly superior to the rumored Reid plan, because it would apply to all income above $500K (including capital gains and dividends), not just payroll income. Clearly, Reid is trying to co-opt the Democratic Senators who make it their life's work to protect the rich (think Evan Bayh and Blanche Lincoln and the estate tax.) That said, Reid's proposal is eminently superior to the excise tax preferred by the Village Wonks and contained in BaucusCare.

Speaking for me only

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    I just want everyone to know (5.00 / 2) (#4)
    by Militarytracy on Thu Nov 12, 2009 at 12:30:22 PM EST
    that I want to join this tax bracket.

    Me, too (5.00 / 1) (#8)
    by sj on Thu Nov 12, 2009 at 01:07:50 PM EST
    I want to pay this additional tax.

    Yes. (none / 0) (#1)
    by Cream City on Thu Nov 12, 2009 at 11:29:17 AM EST
    Unemployment is headed there.  And I know what it will look like, as it's already past that level in my city, the leading city reliant on manufacturing, says the New York Times, and the city with the worst hit to the manufacturing sector.  And in one of the states cited yesterday with one of the ten worst state budget crises, too.  And it just gets worse and worse . . . and the Dems may lose the governorship, as there now is no Dem running at all (after the lone Dem running, the current lieutenant governor, was pushed out, and allegedly the White House).  The last time we elected a Republican governor, he remained in office longer than any governor anywhere.  Heaven help us, as we're not getting earthly assistance.

    And I don't know that people will be paying sufficient attention to hear that Reid is talking about the wealthy.  All I heard on the news this morn were repeated references to raising payroll taxes, period.  For those on a payroll, anyway.

    Sorry, this landed (none / 0) (#2)
    by Cream City on Thu Nov 12, 2009 at 11:31:14 AM EST
    in the wrong thread again.  Weird glitch sometimes.

    Yes, the House income surtax (none / 0) (#3)
    by KeysDan on Thu Nov 12, 2009 at 11:34:45 AM EST
    is the best of those proposed.  The increase in the Medicare payroll tax on income above $500 (unsure if there would be an  equal amount on the employer) is a decent second, but since would apply a progressive, rather than the flat rate, to the 'no maximum wage base' of Medicare, it may make it more difficult politically to further increase the wage base in the future for the other component of the payroll tax, social security. The Senate Finance Committee proposal is a very distant third, and should be left back in the dust.  As with its namesake, "Cadillac" plans are not what they used to be and may be somewhat over-rated.  Moreover, these more comprehensive plans were, in many cases, achieved in lieu of salary increases.  

    Pessimist (none / 0) (#5)
    by waldenpond on Thu Nov 12, 2009 at 12:36:55 PM EST
    Have to say, I don't see this happening.  The tax will be on the middle class, not the wealthy.

    It's about time! (none / 0) (#6)
    by barbarajmay on Thu Nov 12, 2009 at 12:52:58 PM EST
    My income as a lawyer is extraordinary, and I can't think of any good reason for me to be done paying into social security just a few months into the year, while people who are substantially less fortunate pay in all year long.  And I pay just about nothing into medicare.  It has long been time to raise taxes on those who can afford it.  I don't want the damned tax cuts they keep giving me at the cost of the destruction of my country.

    The reason you're done is that SS isn't a (5.00 / 1) (#7)
    by jpe on Thu Nov 12, 2009 at 01:00:42 PM EST
    redistributive program, but a program in which contributions determine a particular benefit.  Since the benefit is capped, your contribution is capped.

    That's been the logic of the program; we could, of course, transform it into just another redistributive tax scheme (and should, in fact), but that would be a transformation of the design of the program.


    Well, Barbara, you are my hero today (none / 0) (#9)
    by Cream City on Thu Nov 12, 2009 at 04:03:20 PM EST
    for your generosity toward the masses, but including my hard-working spouse who was to retire but then lost so much in his pension funds last year.  But today, he came home to say that he finally gave in to the reality that he really is so old, and he signed up for Social Security that will start coming next month.

    I have not seen him so relieved in a long time.  He now hopes to rebuild to the point that he can hope to help his sons again, both going through ups and downs as well, as both are in the construction industry.  But I just gave him the Reagan/Obama/Geitner trickle-down lecture about what he can do to help the economy, too.  So he agreed to spend a little bit of it on me (yay! our first getaway from winter to a beach in years?).  I do my part for Amurrika, too. :-)

    Seriously, if only everyone who is doing well would have your attitude, we would not be seeing the soaring numbers of homeless and worse.  So we are going to give to some charities, too, that are having hard times as the holidays near.


    Hey! Reid, . . . (none / 0) (#10)
    by Doc Rock on Thu Nov 12, 2009 at 08:56:08 PM EST
    . . . put a hefty tax on bonuses over $50,000 per annum!