Among the many taxes and fees that the Senate's health care bill raises is the Medicare payroll tax. CBS: "The Senate measure also raises the Medicare payroll tax on income above $200,000 annually for individuals and $250,000 for couples." At the same time, the bill creates the unelected IMAB panel that will cut $400 billion from Medicare. The folks at e21, busily shaping a free-market agenda for the new century, have some choice words to describe Harry Reid's tax hike gambit:
While the person who devised this scheme has no doubt received hearty congratulations from the rest of the Senate Democratic caucus, the cynicism embedded in this strategy is breathtaking. Each dollar raised from the tax increase gets counted by the Joint Committee on Taxation as offsetting new health spending at the same time that very same dollar is treated by the Medicare Actuaries as being deposited in the Medicare Trust Fund. But if this sort of double counting is such a good idea, why stop at $54 billion? Why not pay for the entire health care reform bill through HI tax increases that also extend the solvency of the HI trust fund? Astonishingly, this may not even be the most cynical element of this tax increase strategy. The proposed HI tax increase is not indexed for inflation. This means that as inflation pushes up household income, more and more families will be subjected to the tax even though their standard of living remains the same. If you don't think this is a problem, consider the lengths Congress must go each year to extend the so-called "patch" that ensures more households are not subjected to the Alternative Minimum Tax (AMT). Originally designed for the same households now targeted by the Democrats' HI tax increase, the AMT was never indexed to inflation because the costs of doing so were too high given all of the revenue it was expected to generate from "bracket creep." As a result, exemption levels that once seemed sufficiently high to exclude all but the richest households would now ensnare over 21 million middle class households absent the annual inflation patch. The same would be true of the new HI tax increase, as families living in high-cost states, struggling to pay their bills, suddenly find themselves subjected to another tax ostensibly designed for someone in a far different circumstance. And, once enacted, repealing the tax would be "too expensive" given that it would be expected to apply to most of the population over the long-run projection window.
The Democratic health care bills pile burden on top of burden on start-up businessmen, who create the lion's share of new jobs, at a time of 10 percent unemployment. A better idea? Let's try a payroll tax cut instead.