House Democrats detail surtaxes to pay for healthcare bill
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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