Democrats Healthcare Fix: Raise Taxes Even More

Sometimes I think Democrats would be happy if we were in a state of permanent recession:

Congressional leaders are raising to 3.8 percent their proposed new Medicare tax on investment income in the final health-care overhaul plan, a Democratic leadership aide said.

The rate is higher than the 2.9 percent President Barack Obama proposed in February. Under Obama’s proposal, the new tax would apply to income from interest, dividends, annuities, royalties, capital gains, and rents for individuals who earn more than $200,000 and joint filers reporting more than $250,000.

House Speaker Nancy Pelosi, asked today if the tax applied to capital gains, said it would be imposed on unearned income “whatever category it is.”

It would be the first time Medicare taxes would cover investment income. The current 2.9 percent Medicare levy currently applies only to salaries and is split evenly between workers and their employees.

“This is a radical change from U.S. tax policy without much debate at a time when we should shift the fundamental core of U.S. tax policy in a more pro-saving and investment” direction, said Mark Bloomfield, president of the American Council for Capital Formation, a Washington group that lobbies for lower taxes on capital.

Obama also backed a Senate-passed proposal to increase the employee’s share of that amount by 0.9 percent for high-income workers. That would effectively add 2.35 percentage points to the worker’s top marginal rate, which under Obama’s proposals would rise to as high as 39.6 percent.