Health Care Plan Hits Rich with More Taxes

But Typical Family Would be Spared Higher Taxes from House Democratic Plan to Overhaul Health Care

(AP)  The typical family would be spared higher taxes from the House Democratic plan to overhaul health care, and their low-income neighbors could come out ahead.

Their wealthy counterparts, however, face big tax increases that could eventually hit future generations of taxpayers who are less wealthy.

The bill is funded largely from a 5.4 percent tax on individuals making more than $500,000 a year and couples making more than $1 million, starting in 2011. The tax increase would hit only 0.3 percent of tax filers, raising $460.5 billion over the next 10 years, according to congressional estimates.

But unlike other income tax rates, the new tax would not be indexed for inflation. As incomes rise over time because of inflation, more families - and more small business owners - would be hit by the tax.

"Twenty years from now, we're going to see more and more small businesses ensnared into paying higher taxes," said Rep. Dave Camp of Michigan, the top Republican on the tax-writing House Ways and Means Committee.

More coverage of Health Care Reform

The tax would hit only 1.2 percent of taxpayers who claim business income on their returns, according to the estimates by the nonpartisan Joint Committee on Taxation. But that percentage would grow as business owners' nominal incomes rise with inflation.

In 2011, a family of four with an income of $800,000 a year would get a $24,000 tax increase, when the new tax is combined with an increase in the top two tax brackets proposed by President Barack Obama and other scheduled tax changes, according to an analysis by Deloitte Tax. That's a 12.5 percent increase in federal income taxes.

A family of four making $5 million a year would see a $434,500 tax increase, about a 32 percent increase, according to the analysis.

"These are very big numbers and very high effective tax rates," said Clint Stretch, a tax policy expert at Deloitte Tax.

The new health care tax would come on top of other tax increases for the wealthy proposed by Obama. The top marginal income tax rate now is 35 percent, on income above $372,950. Obama wants to boost the top rate to 39.6 percent in 2011 by allowing some of the tax cuts enacted under former President George W. Bush to expire.

House Democrats said they are proud that they found a way to finance the health care package largely from a tax on the wealthy. There is, however, little appetite for a millionaire's tax in the Senate, and some tax experts think it is a mistake to tap only rich people to pay for services used by all.

"If health care is a benefit that is worth having, then it's worth paying for," said William Gale, who was an adviser to President George H. W. Bush's Council of Economic Advisers and is now co-director of the Tax Policy Center. "This gives the impression that it's only worth having if someone else pays for it."

Obama promised during the presidential campaign that he would not increase taxes on couples making less than $250,000. However, the health care bill would impose new taxes on people who don't buy qualified health insurance, including those making less than $250,000 a year.

Under the bill, individuals are required to obtain health insurance coverage or pay penalties, which are described as taxes in the legislation. The penalty would be equal to the cost of an average insurance plan or a 2.5 percent tax on incomes above the standard threshold for filing a tax return, whichever is less. There would be waivers for financial hardships.

To help afford insurance, families with incomes up to four times the federal poverty level would qualify for subsidies. The poverty level for a family of four is $22,050 this year.

Republicans argue that the penalties violate Obama's tax pledge, and they liken the millionaire's tax to the Alternative Minimum Tax, which Congress enacted in 1969 to ensure that wealthy Americans cannot use loopholes to avoid paying any income taxes.

The AMT was never indexed for inflation, so Congress must enact a fix each year to spare about 25 million middle-income families from being hit with big tax increases.

"They're going down the same road by not indexing this tax," said the Republican lawmaker Camp.

[rmonroe401]

Tax the rich. Tax them until it hurts. Let the whining begin. I love it.

[gboyd41]

Party of doom09-so, how many of my tax dollars should I shift to you? How much money, which you did not earn, do you want given to you? You are a begger.

[earlysaid]

Good. The very very rich and the very wealthy people need to pay higher taxes. The huge tax cuts for the wealthy are at an end. It was not a good idea to give tax cuts to anyone when America was in an extremely expensive war. There was barely a peep out of the media at the time about this injustice when our troops were at war.

[apuan777]

Two simple things to think about:

A. Rich people don't have to stay in the United States.
B. Health Insurance providers don't have to stay in business.

Why do we assume that these people will take no action!

[velma179]

It is so interesting that those that likely make less than a tenth of the money yearly that this tax applies to... have so many beefs about it.

You would be surprised how many high earners have no problem giving up a tiny fraction like 5.4% (relative to $500 Grand or more, it's NOT a lot), so all Americans can begin to have peace of mind concerning health care.


All of us aren't bowed down at the altar of the me and mine -- and the almighty dollar.

Charity is from the heart, paying taxes from the head, giving extra when you certainly can afford it is just a no brainer -- if it keeps the community strong, helps others who aren't as blessed, it's not a burden.

[chelseacos]

Charity should be at a person's own will, not government mandated. There is no altruism in socialism, only enslavement. We are not a socialist society, not all of us want to be, thus the government imposing more taxes against the will of ANY of it's citizens is not charity. If people want to give, they should and I think we could all be more charitable, but don't tell me taxes are the solution. People are already taxed to death, you keep taking away incentive for achievement. Yes, not all of us bow down to the altar of me and mine, but this nation was founded on individual liberty, you keep taking away that liberty bit by bit. It starts with the rich but when they can't afford there projects the government will start taxing everyone. Have you not noticed the price always goes up? They can't run medicare and medicaid without adding to the deficit, how is this going to be better? Let the rich give that money at their own will.

[natdef_1]

The Top 1% of earners already pays 40% of income tax -- when will the maggots of society decide that they are going to stop feeding off the accomplishments of others?

I, for one, do not WANT someone else paying my way. Sadly, I fear that I am in the minority, as there are vast numbers of "Americans" who willingly accept hand-outs.

[earlysaid]

The top 1% of earners who are vulgarly rich should pay more taxes. But actually many of these very rich people have accountants who make sure they pay as little tax as possible. The rich are not sending cash to the Cayman Islands or Switzerland because they are fine citizens who pay taxes as they should. All anyone needs to know is that people who make $250,000 and under will not be paying more taxes for health care reform.

[pflack]

When we hear that some people might have a substantial tax increase to help pay for Health Care for all in the United States, it's almost a knee jerker, but when you sit back a consider several things like, maybe most people are products of the enviroment they are being raised in. Who is responsible for that enviroment? When business decides it's cheaper to relocate manfacturing jobs to third world countries with no regard for communities they abandon or it's former employee's, or the banks that find every possible way to justify boosting up your interest rate. In fact it comes down to any and all companies that what they think the traffic will bear. Serveral examples might be and I'm don't mean to judge but, Microsoft charges several hundred bucks and more for a disc with a program on it (that for all practical purposes cost them about $1-$2 to reproduce) and I am the first to agree how ingenious and productive some of these programs have made industry and some of us. And you can bet the guy that invented these programs in my opinion, deserves to be well to do because of his idea. But should society also gain, or should society have to pay, and pay and pay? Just what is a fair price. Or if this was good for society, then shouldn't society have some benefit too. Maybe a more fair thought or ideal would be Microsoft should continue to reap the profits but should also accept it's responsibility of paying the higher taxes to help all people. I am not attacking Microsoft, or any other company that is profitable, I just think the folks with the biggest pockets made and make their money off the backs of less fortunate. That dosen't mean it was stolen or wrongfully gotten, it merely means that someone had to dig those ditchs, drive that truck, build that house, fix that car, etc, and off their backs a lot of money has been made, and not by the mechanic hat had to do the labor. The big picture has to be looked at, and I think it's OK to be well to do, but with that comes responsibility. And that responsibility is providing Health Care for every American just like they, the less fortunate help pay for your Police, Fire, Military protection and education.

[natdef_1]

Who's going to be the Social Engineer, you?

By the way, in case you didn't know, the Top 10% of earners ALREADY pay 70% of the income tax. Is that not enough "responsibility" for you???

[jsd330]

I thought Obama and the Dems were all for small business. This tax is going to hurt the small business owner more then the rich.

[bc-1948]

I am a CPA with about 250 business clients - 800 individuals - I sure don't know of many that would ever be impacted by this tax. Guess it depends on your definition of "small business."

[jsd330]

bc-1948 so you have no small business clients that make over $500,000 per year, no wonder you have that many clients. And read the other article about lowering HSA amounts. Come on you are a CPA you should be on top of all these proposed tax changes.

[bytheway59]

no matter how high the tax rates go for the wealthy, anyone making more than me, their take home will still be more than mine.

It is our system of captilism that allows, permits, supports the the opportunity for virtully limitless imcome potental.

[natdef_1]

The point is, why would I work harder if I'm taking home less and less of each dollar. Progressive taxes are a fundamentally demotivating concept.

[natdef_1]

Barry "The EgO'bama" believes that the American Dream should not exist without his bony fingers probing the depths of our pockets.

Human nature will have the rich hanging onto their greenbacks, and in so doing, hanging Barry and his Comrades out to dry. I can't wait!

[lightningF]

What is going to happen when all these rich people start firing people to make up for the amount of money they are losing by paying all those taxes?Now the CBO says only 2 % will take the Public Option,Obama wants to spend a trillion dollars to cover 2 % of the population,and the rest of us will have to suffer for it? what kind of Fuzzy math is that. Cut Medicare,fewer primary care doctors,longer waiting times for tests,eventually rationing because not everyone will get the same care. If we did the congress would not have exempted themselves from taking it.

[lmartink]

How long has it been since the elite have cared for working people? It's been at least 4-5 decades.

The problem with you right wingers is that you love the rich folks, wanting them to get more and more. But stop. Look what the elite has done to us. They have nearly bankrupted our entire economy. Enough is enough.

[natdef_1]

The problem with you left-wingers is you can't get your hands out of other peoples' pants.

Always looking for a hand-out...

Zero!

[bc-1948]

Medicare isn't cut - it's the private insurance plans called Medicare Advantage that will be changed - which is causing huge financing problems - you remember - the plan the Republicans put in place that gives the insurance company $1,400 plus the average cost of a traditional Medicare patient - so the healthy people go to Medicare Advantage - the average cost of the traditional Medicare patient goes up - so the reimbursement to the insurance company goes up. It's the same crap that Golden Rule and Time used to do with individual policies.

IF you read the plan, the focus is on more primary care doctors - not less - that has been one of the big problems.

[PartyofDoom09]

Good the rich have had it way too easy for years now while the poor working man paid his way.

[endurorob_5]

Looks like Obama has you roped into his class warfare.

[natdef_1]

Put your hands in your own pants, for a change.

How did the "poor working man" pay anyone's way, when the bottom 50% of income earners in this country pay ZERO income tax??? The Top 1% pay 40% of the tax -- oh, that's FAIR, right???

[rmonroe401]

You know it. Tax the top 1% of this country. They need to give back some of their ill gotten money. Hit them where it hurts. Yea baby. Yea.

[endurorob_5]

Tax, Tax, Tax. tha is all the dems know how to do is tax for this and tax for that. You failed to obtain the proper education or training that would help you find a job that would allow you to pay for your own health care? Not to worry the dems will tax those that have thought ahead and that will pay for you. Decided to mess around at 15 years of age and had a baby or six. Now you do not have the time to obtain your diploma or any further education and are stuck sweeping floors for a living at 40 years of age. Not to wory the dems are now in charge and you can continue your 8 hour a day go nowhere job then come home and suck down a 12 pack of beer and others will pay your way. What a diservice the dems do to this nation.

[bc-1948]

What a crock. I certainly didn't go the easy route - and yes, I can pay for my own insurance - currently $21,000 this year for myself and my spouse. But everyone can't - you have to have the mass of people in the middle and lower income levels to sustain the capitalistic system we have. Great that you have the "proper education or training" - whatever that is - the fact is that most jobs don't pay enough to pay for health care - I am a CPA - paying my own way - but am very willing to pay more in taxes to ensure we have health care for everyone - it's just the moral and Christian thing to do.

[rmonroe401]

edurorob_5, I hope they tax you even more for being a greedy slob.