Posts Tagged - ‘taxes’

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At over $900 billion, the Senate’s healthcare reform bill–supported by President Obama–will no doubt be expensive to implement. With increasing concern over the national debt, there have been various solutions promoted to minimize its impact on the budget deficit. In order to avoid further deficit increases while expanding affordable health insurance programs, the federal government must raise its income. However, tax increases are very controversial.

One of the potential solutions for funding the legislation is through increasing the Medicare tax. Currently, it is a graduated income tax. The proposal would extend the tax to investment income, such as capital gains, which is not currently subject to the Medicare tax. Individuals earning over $200,000 and couples earning $250,000 annually would have to pay a 2.9% tax on dividends, royalties, and interest over that limit.

The wealthy would be most affected by such a tax, because they tend to have a higher percentage of their net worth invested in stocks and bonds. Meanwhile, they would see little benefit from subsidies to help lower- and middle-income people afford health insurance. Combined with an increased tax on income, it is predicted that the capital gains tax would raise about $184 billion to fund the health care program over the next nine years.