Legal Commentary

Paying for The Health Bill Part II

By Big Tent Democrat

I have been stressing this question and am pleased to see others beginning to look at it as well. Ezra has a good post:

In the House/Senate negotiations, Democrats want to make three major changes to the health-care bill, all of which cost money. First, they want to weaken the excise tax, which means less revenue. Second, they want to increase the subsidies, which means more spending. And third, they want to extend some version of the Nebraska deal federalizing the Medicaid expansion to all the states. That, again, is pricey. So where does all the new money come from?

One answer? Applying the Medicare tax to all forms of income above 250K per year:

Currently, the Medicare tax applies only to wages, without any limits. The 2.9% tax is divided in half, with workers and employers each paying 1.45%. The health bill passed by the Senate would raise the worker contribution to 2.35% for individuals making more than $200,000 a year and couples making more than $250,000 a year.

Under the proposal now being considered, people making more than those amounts would also pay the Medicare tax on dividends and other income from investments, the people familiar with the talks said. Income from pensions and retirement accounts, including 401(k) accounts, would be exempt.

If they prefer a "Medicare" tax on the wealthy instead of an income tax for political purposes, that works for me. However, Ezra makes a good point:

Why Democrats prefer a new Medicare tax to, say, capping the itemized deductions rate at 28% for taxpayers making more than $250,000 is, however, beyond me. And if you did that, you'd have more than $300 billion in new money to play with.

300 billion is more than 100 billion. Ezra has a strong point here.

Speaking for me only

Full post as published by TalkLeft on January 12, 2010 (boomark / email).