House, Senate agree: Tax the rich more
mcclatchy newspapers
WASHINGTON — Amid all the uncertainties about how health-care legislation would affect each American, one thing is clear: The more- affluent would pay higher taxes.
Embracing the progressive — and sometimes politically risky — principle that more of the cost of carrying out public policies should be paid by the well-off than by others, both the House and Senate versions of the bill levy new taxes on the wealthy to help pay for the expansion of health-insurance coverage.
But they differ on who counts as rich and how much they would pay.
Under the House bill, couples with more than $1 million in income would pay an additional levy, or surtax, of up to 5.4 percent. The Senate bill would hit families of more modest wealth — more than $250,000 — with a lower payroll tax increase of 0.5 percent.
The fact that both the House and Senate bills include tax increases marks a striking shift in Democrats’ political calculus. Not many years ago, when the party sought to shed its liberal reputation, Democrats treated any kind of tax increase as political dynamite.
Now, however, concern about the deficit is mounting and Democrats are less fearful than they once were of taxing the wealthy, said Sen. Jay Rockefeller, D-W.Va., a multimillionaire who also would favor means-testing Medicare premiums. “It’s not a complicated idea,” he said.
A recent poll by The Associated Press found 57 percent of those surveyed favored taxing people earning more than $250,000 a year to pay for the health-care overhaul. Of a variety of financing options tested in the survey, that tax was the only idea supported by a majority.
“Taxing the rich works because they’ve got the money,” said Robertson Williams, a senior fellow at the nonpartisan Tax Policy Center. But, he said, “You can’t go to that well over and over again.”
Many other provisions of the two health-care bills will affect families’ pocketbooks, for better and worse. For example, people who have very generous insurance plans likely would face higher costs or reduced benefits under the Senate plan. It would tax insurance companies that offer such plans, and the cost would probably be passed on to workers.
The proposed tax increases offer a fat target for Republicans who say the health-care bill burnishes Democrats’ reputation as a party of tax-and-spend liberals despite high-profile losses in this year’s off-year elections.
“The voters spoke loud and clear at the ballot box earlier this month: They are sick and tired of all the reckless spending and big-government interference coming out of Washington, D.C.,” said Republican National Committee Chairman Michael Steele.
“Harry Reid’s bill is exactly what the voters don’t want, and Senate Democrats who let this bill even come up for debate will pay a price on Election Day next year,” he said.
Sen. Judd Gregg, R-N.H., ranking Republican on the Senate Budget Committee, predicted that the bill’s tax proposals would not be approved, so the bill’s cost would instead be added to the deficit.
“It’s just not going to happen,” he said of the tax increases.
When President Barack Obama first proposed his health-care plan early this year, he said he would insist that it not add to the deficit, promising to offset any new spending with tax increases or spending cuts in other areas.