Democrat tax increases to pay for rationed care

Washington Times:

When it comes to the taxes associated with the new health care bill, Vice President Joseph R. Biden Jr.'s assessment stands: It's a big — very big — deal.

The historic overhaul of the nation's health care system that President Obama signed Tuesday, when combined with the fixes making their way through Congress, will raise taxes over the next 10 years by more than a half-trillion dollars.

The tax increases range from hundreds of billions of dollars in new Medicare levies, including one that taxes investment income such as capital gains and dividends for the first time, to a 10 percent excise tax on indoor tanning services that will raise less than $3 billion over the next decade.

Imposing a Medicare tax on investment income "would reduce demand for investment, which is the last thing that the economy needs right now. It would slow [economic] recovery, reduce employment opportunities and hinder wage growth," said Karen Campbell of the conservative Heritage Foundation. "Less investment, lower investment values and lower wages hinder the ability of households to build wealth."

Under a procedure that doesn't require a 60-vote majority for approval, the Senate is considering a package of changes to the new health care law to placate House members' concerns about the Senate bill, which the lower chamber approved Sunday with no Republican support. Among other things, the Senate must approve the numerous tax-law changes that the House passed in a second bill Sunday to fix the upper chamber's December proposal.

By far the biggest tax increase — more than $210 billion from 2012 through 2019 &#8212. involves Medicare, the $500 billion federal health care program for the elderly and disabled. Medicare taxes would be raised in two ways.

First, the new law increases the Medicare payroll tax on employee wages and salaries from 1.45 percent to 2.35 percent on earnings above a certain amount — $200,000 for individuals and $250,000 for couples who file jointly. The employer's share would remain at 1.45 percent for all wages and salaries — creating an effective 3.8 percent tax rate for income in those higher brackets.

Second, for the first time ever, the bill would apply Medicare taxes to several forms of "unearned income" — capital gains, dividends, interest, royalties and other sources besides wages and salaries — above the $200,000 and $250,000 thresholds. The individual or couple must pay the whole 3.8 percent Medicare tax because there is no employer with whom to split the bill on "unearned income."

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This is just the beginning. Then there are the state taxes that will have to be increased to meet the unfunded mandates for Medicaid. With the expiring Bush Tax cuts the Democrats will hit our faltering economy with even more new taxes.