Momentum for health care reform continues to build following the passage on Saturday in the House of Representatives of H.R. 3962, the most sweeping health care legislation in decades. The House bill includes a surcharge of 5.4 percent on adjusted gross income (AGI) above $1 million for married couples and $500,000 for singles. As CTJ's new report explains, our calculations confirm statements from the House Ways and Means Committee that this would affect only the richest 0.3 percent of taxpayers in 2011, the first year the surcharge would take effect.

Meanwhile, press reports indicate that Democratic leaders in the Senate are considering changing the Medicare tax as a way to help finance health care reform. It's unclear exactly what is being contemplated, but one option seems to be reforming the Medicare tax so that it no longer exempts investment income. This is one of the revenue proposals that has been championed by CTJ for the past several months.

We currently have one major tax for health care, the Medicare tax, and it applies only to wages and salaries. People who live off their stock dividends, capital gains, interest and other types of investment income contribute nothing to it. What's worse is that the people who have most of this investment income are the wealthiest among us. CTJ and many other organizations have argued that one sound way to raise revenue is to reduce the many ways we subsidize investment income through the tax code.

Another option that Democratic Senate leaders are considering would leave the Medicare tax as a tax on wages and salaries only, but would increaes the rate for those who earn more than $250,000 a year. This would also be a sound, progressive way to raise revenue. But it would be less preferrable, since it would actually increase the disparity between how we tax income from work and how we tax income from wealth.

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

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