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Reid Looking at Medicare Tax Hike on Well-to-Do Couples

By Lori Montgomery
Senate Majority Leader Harry M. Reid, days away from unveiling the Senate's version of health reform legislation, is considering a new tax on families earning more than $250,000 a year to help finance the package, Democrats said Thursday.

Reid (D-Nev.) is looking at raising the Medicare payroll tax, currently set at 1.45 percent, on such high earners, according to two Senate Democratic sources who spoke on condition of anonymity in order to discuss private negotiations.

Another option is applying the Medicare tax for the first time to capital gains income, White House budget director Peter Orszag said Thursday at a Washington summit organized by a corporate affiliate of Bloomberg News.

Either option would generate more cash, which would allow Reid to increase subsidies in the Senate's package to help low- and middle-income people purchase health insurance. Alternatively, the money could be used to scale back a tax on high-cost health insurance policies. That tax was proposed by the Senate Finance Committee but has proven hugely unpopular with labor unions, whose members tend to hold such so-called "Cadillac" policies.

The Cadillac tax failed to gain traction in the House, which approved its version of the health overhaul on Saturday. The House bill instead relies on a 5.4 percent surtax on the rich, targeting income of more than $500,000 a year for individuals and $1 million a year for families. Either of the Medicare taxes would move the Senate's tax policy closer to the House's position.

But Reid is unlikely to completely abandon the Cadillac tax, Democrats say. Because the tax would prompt people to avoid high-cost policies and shift cash out of the bloated health care system, congressional budget analysts and the White House have identified it as the most important provision in either bill for reducing the overall cost of health care.

Reid spokesman Jim Manley declined to comment on the health care deliberations, which are expected to conclude as early as Tuesday, when Reid could attempt to move a bill to the Senate floor.

By Lori Montgomery  |  November 12, 2009; 6:53 PM ET
Categories:  Health Reform  
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The plan that passed the House claims that a major portion of the funding for Health Care will come from saving 500 billion dollars in Medicare by eliminating waste, fraud and abuse.

I call on Speaker Pelosi and her Democratic allies to introduce legislation requiring these claims. Until this legislation is introduced and passed I consider this funding source to be a fraud being perpatrated on the American people.

There is very few politicians who will allow any cuts to Medicare and to claim so is a lie!

Posted by: mwhoke | November 13, 2009 8:24 AM | Report abuse

What’s not to like about the House’s action?? Congress is doing what Bernie Madoff did but with our Medicare and on a mind boggling scale – IN THE TRILLIONS! If you don’t believe it, ask to see the Medicare account with your name on it AND your contributions - cash/investments- backing up the account. What is worse as the baby boomers retire and the unemployment rolls expand past 20%* there are dramatically fewer dollars going into Medicare and the CURRENT UNFUNDED LIABILITY AND CURRENT CASH DEMANDS FOR SERVICES are combining to rise like a TUSUNAMI!! No cash and no investments – JUST GOVERNMENT IOUs and our taxes` will have to go up to pay off the IOUs but we have already PAID our Medicare taxes!!

My Representative, promised in the Town Hall Meeting I attended not to vote for ANY Medicare bill that did not contain the means of payment. This was a lie.

1. The Congressional Budget Office estimates over the 1st 10 years the immediate out of pocket costs to be $1.2 trillion** ($4,000 for every man woman and child in the USA) and the Wall Street Journal estimates a minimum of $2 trillion* ($7,000 each). Who will pay, when and how?
2. The Press conveniently omits the IMMEDIATE $4 to $7 trillion** ($13 to 23,000 each) this bill adds to the current UNFUNDED liabilities. Who will pay, when & how?
3. The Press conveniently omits the CURRENT UNFUNDED liabilities built up over the past years of $35 to 40 trillion** ($117 to 133,000 each). Who will pay, when & how?

If my math is correct, we each need to pay $134,000-$163,000 over the next 10 years to avoid saddling future generations with OUR health care bills. THAT IS $13,000 TO $16,000 EACH PER YEAR!!

*10.2% today plus the underemployed (part timers) and those who have given up looking equals 20+%.

**A short reality check:
o $1,000 x 1,000 = $1 million
o $1,000,000 x 1,000 = $1 billion
o $1,000,000,000 x 1,000 = $1 trillion
o The Forbes 400 richest (by total ASSETS) Americans start with Bill Gates at $80 billion and drop to #400 at $950 million. All 400 have + or - $1.2 trillion in TOTAL! Confiscate it all and we probably cannot pay the 1st 10 years INCREASE in Medicare bills.

This PONZI scheme makes Madoff look like a cheap skate and we all should be arrested and jailed. WE ARE STEALING FROM FUTURE GENERATIONS TO PAY FOR OUR MEDICAL CARE! Friday, November 13, 2009

Posted by: PRRWRITER | November 13, 2009 10:40 AM | Report abuse

well let me see...
I own a Biz..or I am exec at company..
I am going to be nailed for taxes--more taxes..
Let me see...
increase price of products made sold or increase my prices for whatever service..
PASS costs on...Ummm...that will work..
then the boozo's at end of ladder pay for it..
GET IT????

Posted by: rw62827 | November 13, 2009 10:57 AM | Report abuse

The Democrat tax program is more and more evolving into a socialist redistribution of wealth with increasing taxes on "the rich". I am getting so tired of it. In my case, my wife and I earn more than $250,000 per year, which we work hard for. We put 2 kids through private school and private colleges and worked hard to do it. Not complaining, just stating a fact, it was our choice, but we feel that our kids got a much better education that way, especially in elementary and high schools. There are many good state universities, which by the way we are supporting with our state taxes. We get no tax break on our kids' tuition bills since we are "rich". By the way, MY definition of rich is someone who can live off their investment income and does not have to go out the door every day to work, which is certainly not us. Our property tax pays for two kids annually to attend the local high school. We pay our fair share of federal income tax. I am 65 and choose to continue to work, hopefully into my early70s. I just learned that my medicare taxes will continue even after I reach 66 which is my social security full retirement age, and, get this, medicare does not cover me overseas, which is where I work! So I will continue to pay this tax past 66 and not even be able to benefit from the program, such as it is. Now the Demos want to increase this tax on me and others like me. Where does it end?
We are heading into the situation that existed in the United Kindom in the mid 70s where the maximum income tax rate was 98%! This thoroughly disincentivized large numbers of people in regard to working with most people opting for more time off instead of increased compensation. This is where the Demos are taking us. Hopefully, the Republicans will field an better ticket in the next presidential election and Obama will be only a one term president. It is also time to block this Demo momentum by electing enough Representatives, Senators, so at least one house has a Republican majority and bring back some checks and balances on the present socialist regime.

Posted by: jfgerald | November 13, 2009 12:12 PM | Report abuse

You got it right Reid. Tax the successful, such as jfgerald and give it to the less successful. Sounds like "From each according to his ability to each...."
That is where we are headed if we don't stop this tax and spend administration. It is getting scary out there.

Posted by: Kansas28 | November 13, 2009 1:22 PM | Report abuse

Reid is getting worse & worse as he goes on. He better realize that with his abuser of his little powers he has now will be gone in 2010. I think him & Pelosi are such scum buckets to treat our parents & seniors like this just shows you they have no compassion for the American people. Especially the ones that served in WW11 & fought for our freedoms our Constitution & saved the Germans & others from Hitler. What is wrong with these people that think they are so much better then the American people that they give there self a raise , keep their good insurance & spend all of the taxpayers dollars & keep getting us so deep in debt that we will never get out. Pelosi calls herself a Catholic. She sure does not present herself as anything but a cruel non compassionate person who will do anythig for power & so is true for Reid. Time to get rid of both,

Posted by: egw7777 | November 13, 2009 11:35 PM | Report abuse

unemployment will keep going up until obozo and the democrat socialist party are voted out of office. No businessman or people making over $250K will invest to create new jobs in this anti-business climate the democrats foster. Democrats are losers that can't make it on their own so they steal it from successful people.

Posted by: charlietuna666 | November 14, 2009 8:22 AM | Report abuse

The whole question of taxpayer funding for abortions has long ignored the fact that MANY taxpayers WANT their taxes to be used to fund abortions for poor women that need them.

The simple solution is to have a voluntary added tax that is earmarked for abortion funding. We have this voluntary tax program in New Mexico--when the individual fills out their form there is about a half-page of options they can check where they can fill in the amount they want to donate--to the NM state parks, for example-- and they can fill in however much they want. I would certainly be happy to add $10, or more if I felt I could afford it.

If you like this idea, please call your representatives and senators, and call more than once! and tell them you want a voluntary added tax option that will dedicate our taxpayer dollars for abortion funding. Maybe you can call it the abortion tax option.

It is outrageous that we are prevented from doing this by the damnable actions of the anti-abortionists.

Posted by: dotellen | November 15, 2009 9:40 AM | Report abuse


a few basic questions for you to ask all the principal players.

wasn't the primary goal of this reform to CUT THE NATION'S TOTAL HEALTH CARE EXPENDITURES?

if this is still the primary goal, why the effort to raise money to pay for the reform that is supposedly designed to save money?

how/why is abortion in this discussion?

if covering all citizens is important - why aren't all citizens being covered in any version of the reform proposals?

where is the part of the legislation designed for the purpose of getting and keeping all citizens healthier?

where is the tort reform?

where is the universal record keeping and record security proposal?

thank you. i'll look forward to reading an article that contains the answers.

Posted by: boblesch | November 15, 2009 10:35 AM | Report abuse

For charlietuna666, PRRWRITER, rw62827, fgerald, Kansas28, egw7777, et. al. who call the rest of us Socialists because we "care" about ALL Americans, not just ourselves.

Where have you guys got your disinformation?(Reaganism for "lies.) Back in the Eisenhower admin., the "rich" were taxed on 95% of income -- tho' few ever paid that much. During Kennedy, the "rich" were taxed on 65% of income -- again, few ever paid that much. Today, the highest tax bracket is 35% and very very few of the very rich pay that much due to all the tax breaks and cuts and the special legislation built into the laws passed by the Bush Neocon Congresses, many of whom have been voted out of office, deservedly so for being so self-centered and selfish -- in the manner of the grand libertarian model, Rep. Ron Paul from Texas whose philosophy comes from Ayn Rand. IOW, the only people worthy of citizenship are the rich, healthy and able bodied, the adult young that are 'contributing' to the country. Forget the elderly, the infirm including military veterans, the very young and wasteful spending on those who cannot 'pull their own weight' in society. If anyone cannot 'pick one's self up by the bootstraps,' they don't belong in a Capitalistic, 'free trade' society. Welcome to Nazi Germany, everyone! In 'your' world 2 of the greatest scientists who ever lived, Albert Einstein and Stephen Hawking, would be discarded as inferior mentally (Einstein didn't speak until he was 3 years old ) or physically impaired (Hawking because of Lou Gehrig's disease).


Posted by: dcgeneral | November 15, 2009 4:33 PM | Report abuse

As a so called "rich" person, I agree in principle that the more you make, the more taxes you should pay...up to a point. Past that point fair becomes punitive. Let's not penalize those who have a achieved a certain degree of financial success and let's be careful how we define "rich". How was this magic cutoff of $250,000 derived? Why does “rich” encompass the broad range from $250,000 to “the sky’s the limit”. My husband and I make barely over $250,000 (no I don’t expect violin strings to strike up in the background, we do okay) but somehow I don’t get how we are lumped with the truly rich, who by the way, will likely pay a far lower percentage of their total wealth in taxes than us what with the write-offs, shelters, and various financial sleights of hand they can perform to lower their taxable income. My husband and I are in that unfortunate category of “rich” where we make too much to get any breaks but we don’t make enough that it doesn’t matter. We are both employed and henceforth, have very little in the way of tax write offs other than our mortgage and 401K retirement plans. It’s enough to make me think about quitting and by doing so reduce our income to below $250,000. I’m not sure it will be worth it to work. Too bad, because as a physician, the government spent a lot of money to help train me and 50% of my practice is primary care and if I do say so myself, I’m pretty darn good at what I do. And we haven’t even delved into physician reimbursement as it pertains to financing health care reform. Oh well, early retirement, here I may come….

Posted by: car5994 | November 16, 2009 6:38 PM | Report abuse

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