November 12th, 2009
08:23 AM ET
5 years ago

Source: Reid considering hiking Medicare payroll tax

Senate Majority Leader Harry Reid is considering a provision to raise payroll taxes for the wealthy as part of a health care bill, a Democratic source told CNN.
Senate Majority Leader Harry Reid is considering a provision to raise payroll taxes for the wealthy as part of a health care bill, a Democratic source told CNN.

Washington (CNN) - Senate Majority Leader Harry Reid is considering a provision to raise payroll taxes for the wealthy as part of a health care bill, a Democratic source told CNN.

The Democratic source said Reid is considering an increase in the Medicare tax for individuals with income exceeding $250,000. The current Medicare deduction is 1.4 percent of income.

The idea is an alternative to the Senate Finance Committee's proposal to tax so-called "Cadillac" health insurance plans that offer broad coverage at a much higher-than-average price.

Reid is using the Finance Committee bill and another from the Senate Health, Education, Labor and Pensions Committee to forge a Senate bill expected to come before the full chamber before Thanksgiving.

However, Democrats in the Senate have been under intense pressure from unions to drop the tax on Cadillac coverage. Organized labor is a key Democratic party constituency, and many rank-and-file union workers have high-cost plans they received by scaling back pay demands at the bargaining table.

It was unclear if the Medicare payroll tax hike being considered by Reid, D-Nevada, would replace the tax on Cadillac plans in the Senate bill. Reid is expected to introduce the Senate bill in coming days.

The House has passed its own health care bill, which includes a tax surcharge on individuals making more than $500,000 a year and couples earning more than $1 million a year.

Such a tax surcharge on the wealthy is opposed by most Senators, while the Cadillac health coverage is considered unacceptable to the Democratic majority in the House.

Reid's idea would be an attempt at compromise by tying the tax increase to more revenue for the popular Medicare program.

If the Senate passes a health care bill, the two chambers would have to merge their respective measures in a conference committee and approve the final version before it could go to President Barack Obama to be signed into law.


Filed under: Harry Reid • Health care
soundoff (76 Responses)
  1. GI Joe

    Cut out all the loopholes the wealthy have – that will fund healthcare, medicare, and pay for Bush's wars in no time flat.

    November 12, 2009 10:55 am at 10:55 am |
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