House Democrats detail surtaxes to pay for healthcare bill

House Democrats today unveiled their massive healthcare reform proposal and detailed how they would pay for it. Included in the bill are proposed tax increases on high-income earners that are bigger than what was rumored last week.

The proposal calls for a 1% surtax on modified adjusted gross income between $350,000 and $500,000; a 1.5% surtax on income between $500,000 and $1 million; and a 5.4% surtax on income exceeding $1 million.

The income figures are for married couples filing jointly. In the case of a single filer, the thresholds would be 80% of the income levels listed above.

The 5.4% "millionaire" surtax exceeds the 3% that House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.) last week indicated was the working number.

The top marginal federal tax rate now is 35% on taxable income above $372,950 for married couples.

The bill also includes a provision to raise the 1% surtax to 2%, and the 1.5% rate to 3%, in 2013 unless savings from federal healthcare reforms reaches preset levels. But if the savings exceeds certain targets the bill provides for a rollback of the tax increases.

Rangel said lawmakers chose the surtax on high-income earners because it "causes the least amount of pain on the least amount of people."

The centerpiece of the healthcare proposal, of course, is insurance coverage for Americans who don’t have it. All Americans would be expected to have some form of coverage. If you opt out, you'd pay a penalty tax of 2.5% of adjusted gross income above a specified level.

Go here for the Democrats’ summary of the plan, including proposed requirements for businesses and changes in Medicare coverage. (Curiously, the summary doesn't include the tax hikes, but they're in the 1,000-page bill.)

Bloomberg News has more, here, on how the political battle over the bill is shaping up.

-- Tom Petruno

Photo: House Democratic leaders, including Rep. Charles B. Rangel, second from right, at the unveiling of their healthcare plan today. Credit: Manuel Balce Ceneta / Associated Press

Comments

[John]

Why not tax the roughly 50% of Americans that do not pay Federal income tax. It is time they contributed for a change.

[Jeff Smith]

Amen. Well done, Dems!

[Duane]

Some clerk at the DMV is going to decide whether I can get a certain medical procedure?

[Bill]

Hey Duane,
Some clerk at Aetna or Blue Cross or United HealthCare, who may even get a bonus to reject claims, already decides whether you can get a certain medical procedure.

[Sitting at home]

That's fine as long as I don't have to work and pay taxes. lol

[martscan]

Not one in a million people will actually read this bill (including me), yet 999,999,999 out of a million will have an opinion on it.

[Bob Johnson]

I'm not interested in paying for someone else's healthcare. Good thing the Democrats are there to decide the best use of my money.

[Dumbfounded]

Does this so called Health Care Reform control the medical procedures approved? Or is it another entitlement bound for abuses with no end...

Octomom was able to use her government disability checks to fund her plastic surgery and in vitro fertilizations. Makes you wonder how on earth you can claim to be disabled with back problems and be pregnant multiple times with the last one with multiple fetuses. Who approved and signed the "work" related disability checks for this one? And this is before free health care for everyone...

No wonder California is bankrupt...

[Jim]

I resent the hell out of Charlie Rangel raising anyone taxes for any reason, After all he cheats on his taxes, but since he is a Democrat he gets a free ride. I am sick of the current crop of clowns in congess telling us now to live. We need to clean house.

[JS]

Ironic that the first black president is bringing economic slavery to this country.

[BeefMasterX]

Hubert Humphrey assured Congress medicaid would never become an entitlement, America would not become a welfare state, and the program would not cost more than $90 million dollars.
Obama is Humphrey and Carter rolled up inside a Karl Marx bun.
He is a dangerous liar.

[Gabrey]

For those that say that they "don't want to pay for someone else's healthcare," TOO LATE! You pay for every uninsured ER visit from the uninsured. Wouldn't you rather pay less to keep folks out of the ER in the first place?

[mike bloxham]

these increases are tiny. top earners make, literally, billions, and we dont have the gumption to tax them above (in their case) 15%. if we dont pass this, we deserve all we (dont) get.

[Mikesf13]

The ultra wealthy are able to reap political favors that let them skew the system (gutted antitrust law, rock bottom capital gains taxes, socialization of downside risk) so they have a huge and rising share of income. It's about time they paid. Oh, wait. They reap most of their income through "capital gains", so they still won't pay this tax. They will just bitch about how they are the only ones paying icnome tax conveniently ignoring, for example, payroll taxes, which at over 15% mean that a hedge fund manager's minimum-wage maid pays higher taxes than he/she does. Ain't that America!

[Tom Petruno]

@Mikesf13: Net capital gains are included in adjusted gross income on your 1040 form, so they would be covered by the surtaxes.

Tom Petruno

[Bob Daniel]

Those who pay the most should get a little of it back.
Hope you enjoy. I once heard that 20% of the
population pays 80% of the taxes

Sometimes politicians, journalists and others exclaim; "It's just a tax cut for the rich!" and it is just
accepted to be fact.

But what does that really mean?

Just in case you are not completely clear on this issue, I hope the following will help. Please read it
carefully. Let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one
day, the owner threw them a curve.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20."
Dinner for the ten now cost just $80. The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected.
They would still eat for free. But what about the other six men - the paying customers? How could they
divide the $20 windfall so that everyone would get his 'fair share?'

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the
fifth man and the sixth man would each end up being paid to eat their meal.

So, the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same
amount, and he proceeded to work out the amounts each should pay.
And so:

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33% savings).

The seventh now paid $5 instead of $7 (28% savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their
savings.

"I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man," but he got
$10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times
more than me!" "That's true!!" shouted the seventh man. "Why should
he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits
the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for dinner, so the nine sat down and ate without him. But
when it came time to pay the bill, they discovered something important. They didn't have enough money
between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The peoplewho pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In
fact, they might start eating overseas where the atmosphere is somewhat friendlier.

[Factonfact]

A plan for affordable health care for every American -- all 300 million citizens, young and old, children and adults -- is working its way through Congress. A House version pays for the plan through a tax on the wealthiest Americans. Further, the measure would keep the giant insurance companies honest by offering folks a government option if they so wanted one. And it would rein in the cost of prescription drugs.

The health reform plan now taking shape is a big, big win-win for every single citizen who at the present time must worry awfully about being wiped out financially by an illness and for every single citizen who must risk going without treatment or the medicine they need because of the enormous and frightening cost. In short, the sweeping health care reform measure under consideration by Congress will relieve all of us of worry for the foreseeable future about affording the health care we need when we need it. We won't have to be scared anymore.

(And isn't it nice that the cost to the government will be paid in large measure by the Wall Street sharks and their banker and corporate clients whose greed and lack of concern for anyone but themselves are responsible for the financial dilemma in which our nation finds itself and which we are struggling to get through?)

Of course, the Republicans are united against it.

[Bob Daniel]

A surtax on the rich already exists, it's called the AMT or Alternative minimum tax.

[Tom Petruno]

@Bob Daniel: As many middle-class taxpayers know too well, that AMT is no longer just a surtax on high-income folks...it reaches pretty far down the food chain.

Tom Petruno

[Robert Chapman]

For us over 65 types, we are waiting to hear when our healthcare rationing system kicks in. I guess I had better buy my plot early, to miss the rush later on. If you think I am kidding ask yourself where are all the new doctors going to come from to take care of all the new Obama covered patients? The old and terminally ill will probably get their tickets punched early through denial of services to people over a certain age. Blade Runner anybody?

[Karen]

Business thinks health insurance is too expensive. Self employed people and people with pre existing conditions cannot afford health insurance. So the politicians answer is to tax those people for not providing or having insurance? How does that work and how will that solve anything? People want healthcare to be affordable. They don't want the government to take it over or start penalizing people for not being able to afford it. What a stupid solution!

[larry]

I hope, for the first time in my life, that the reactionary Republicans who are posting here against the health care plan are successful.
This is a terrible plan, which by requiring everyone to buy insurance from existing insurance companies is just increasing insurance company profits. The so-called "public option" doesn't kick in until 2013, and is very limited as to who can be covered. This is a complete cave-in to insurance companies by feckless Democrats, and should die a quick death. Republicans, have at it!

[jacksmith]

THIS IS IT!

The healthcare reform bill released by the House Of Representatives is an excellent bill as I understand it. It is carefully written, and thoughtfully constructed, informed, prudent and wise.

This is the type of bill that all Americans can feel good about. And this is the type of bill that has the potential to dramatically improve the quality of healthcare for all Americans. Rich, middle class and poor a like. Democrats, Republicans, Independents, and all other party affiliations. This bill has the potential to dramatically improve the quality of life of every American.

The house healthcare bill should be viewed as the minimum GOLD STANDARD by which all other proposed healthcare legislation should be judged. All supporters of true high quality healthcare reform should now place all your support behind this healthcare reform bill released by the United States House Of Representatives, as the minimum Gold standard for healthcare reform in America.

You should all now support this bill with all your might, and all of your unrelenting tenacity. This healthcare bill is a VERY, VERY GOOD! bill for all of the American people. Fight tooth, and nail for every bit of this bill if you have too. Be aggressive, creative, and relentless for this bill.

AND FIGHT!! like your life and the lives of your loved ones depends on it. BECAUSE IT DOES!

SPREAD THE WORD

(http://www.youtube.com/watch?v=RSM8t_cLZgk&feature=player_embedded)

God Bless You

Jack Smith — Working Class

[DHK]

This is a terrible plan that benefits the same insurance companies that have prevented any real reforms. These insurance companies, who profit by denying care to people and who cherry pick the healthiest members of society, are being rewarded by politicians who received campaign donations(bribes) from these same companies. The US spends almost double the per capita amount as all other industrialized nations with worse results. We need to get rid of the health insurance middlemen and replace them with a successful single payer coverage,

[BLM]

As usual, the Dems are lost in a fantasy world that doesn't exist. Why do you morons keep putting them back in office.

[Keith]

Expanding Medicare to cover everyone offers the best way to cover Americans regardless of their employment status. Creating a robust public plan similar to California State Fund and open to every applicant is the next best system — especially if premiums were based on a percentage of payroll or income. http://www.scif.com/about/About.html

Medicare for everyone or a robust public insurance plan will help Americans become self insured through a self-supporting, non-profit entity. Many large firms can self insure, but even they are seeing the pressure with a limited pool of beneficiaries. National self insurance programs like Medicare or a robust public insurance plan based on CA State Fund offers Americans the best opportunity to pool our resources so we can become a nation that insures the medical care for every legal resident.

[Sam]

I can't believe this is happening. Wow, it sounds so awesome! Everyone has health care access. GOD BLESS AMERICA!

ALL OF YOU WHO SUPPORT THIS ARE IDIOTS! The government cannot do a better job than the private sector, no matter how much you hate the insurance companies.

What happens when you are damaged by a policy of the government? What recourse do you have? NONE! At least if the insurance company does something wrong, they pay. The government will say F U!

You are all idiots, you don't get it! Lets see we have the following government owned programs:

1. Banks and Financial Industry
2. Auto Industry
3. Energy (Oil and Gas, etc.)
4. Health Care
5. Media
5. ???

You know who I equate Obama and the Democrats with... HITLER! This is what Hitler did before he invaded Austria. I would hate to be a white male right now, because I can see the Government coming after you...

America is dead, and you people don't even know it.

[Dave]

This is a very watered-down version of what we really need; single payer. It is time to stop looking at healthcare as a "benefit" to those who get lucky enough to work for a company that offers it. Healthcare is a necessity for Americans as much as education, and therefore should be provided as such. To those on the right that will scream about the government rationing your healthcare, you already have insurance companies rationing your healthcare. The are just making big-B Billions of dollars in profit while they are doing it.

Truthfully, the only way this country will progress "for the people" is to have public campaign financing. Too many legislators on both sides of the aisle are beholden to big-money contributors and lobbyists. The average person cannot compete, and our interests are not looked after like they should be. If you want any kind of meaningful health care legislation, or tax reform or whatever, it is imperative that the moneyed in this country are put on the same level with everyone else in terms of access to lawmakers. The real reform we need before anything else is campaign finance reform.

[Charles Hofgaarden]

One more nail in the coffin for any hope of real economic recovery in the next few years. With all of the hgher taxes already coming at us from every level, high incomers will be spending well over half of their income for government, leaving little desire or capability to create the 75% of new jobs they USED to create. Congratulations , America, you can't even figure out that we're ALREADY bankrupt!

[Jason]

Considering the business community is now FIRMLY behind a public option, perhaps the neodolts on the right should hush up.

Lets count the supporters of a public option:
Small Businesses
AMA
WALMART!!
....and of course the American people.

If you don't like it - leave.

What the neodolts try to prevent the bill from coming out of committee. This is priceless.
http://www.youtube.com/watch?v=nz5AmhI9g7o

[Mike]

Premiums anyone? The bill is for affordable health right, not free. User fees are the way to pay for this not charging the 5% of the population that already pays 80% of the taxes.

[Rosco1776]

Democratic House Leaders Conceal the Fact That Their Health Bill Covers Illegal Aliens.............

http://www.fairus.org/site/News2?page=NewsArticle&id=20995&security=1601&news_iv_ctrl=1721#1

Enough of the big government welfare nanny state!! Where does it state in the constitution that everyone is entitled to health care? The system is broke but this won't fix it. Now the government owns banks, car companies and soon insurance companies. It's called facism and socialism folks, wake up!!

[t.cox]

http://www.campaignforliberty.com/blog.php?view=22163

I don't want or need anyone else to buy me health insurance. I am capable of taking responsibility for my own health.

[Shane]

Anybody remember the Prescription Drug and Medicare Improvement Act of 2003? President Bush said it would only cost $400 Billion and now the new cost is $1.2 Trillion. That is three times as much people. President Obama says health care reform will cost $1 Trillion. The real cost will be three times as much and it will cost $3 Trillion. There are not enough rich people to pay for Health Care Reform. It is cheaper for the Federal Government to reimburse the hospitals. The National debt is over $11.5 Trillion and we should not do Health Care Reform until the National Debt is paid off.

[joe4liberty]

Let me get this straight; if you are capable of basic math and understand that insurance is more expensive than simply taking care of your health, and then paying out of pocket when you actually NEED to go to a doctor, then the politicians will now tax you for it(???) which means that the smart & healthy people will be driven out of the country (Atlas Shrugged style). Didn't my grandfather fight against this sort of thing in Europe so that we wouldn't have to deal with it here?

You want to reform health care, get the government's hands out of it! We once had the best health care in the world, then the government created Medicare, Medicaid, HMO's, etc... etc... Now the government pays for 50% of all dollars spent on health care and our system is officially a MESS. The government's answer?.. More of the same thing that got us into this mess!! And so many lemmings are crying; "MORE! MORE! MORE! Washington we love you - give us MORE!!!"

Jack Smith, you are almost right, our lives do depend on it, but sadly you and the rest of your ilk want to force the miserable healthcare found at the VA on the rest of us.
If government health care is such a good idea - like any and all other communist ideas, why not make it voluntary? If it's really a good idea, everyone will voluntarily join in no time at all. That is how you test a despotic idea, when you are forced at the point of a gun to "join" than freedom is lost.
God save us, we're running out of countries for free men to move to!

[Johnny C for Pres]

I hope the politicians get put on the same med plan as the rest of us, after all it is such a great plan they don't need there nice cushy health care plan that cost tax payers millions of dollars. If it is good enough for then it must be good enough for them!!!!!!!!!