House Democrats propose surtax on rich to pay for health care

McClatchy NewspapersJuly 14, 2009 

WASHINGTON — Democrats in the House of Representatives unveiled a 1,000-page-plus health care-overhaul bill Tuesday that would levy a surtax on the wealthy in a bid to pay for the program without adding to the national debt.

The bill, which House committees will debate this week, would create a government program to compete with private insurance companies and would mandate coverage for all. House Democratic leaders wouldn't put a precise price tag on their plan nor say how they were going to pay for all of it.

One way that the tax-writing House Ways and Means Committee proposed: a surtax on wealthy Americans, individuals who earn $280,000 and up and couples who make $350,000 or more. The surtax would start at 1 percent, rise to 1.5 percent on those with incomes of more than $500,000 and increase to 5.4 percent on incomes of more than $1 million.

The surtax — on top of current income-tax rates — would raise around $550 billion over 10 years. In addition, almost as much would come from spending reductions in Medicare and Medicaid.

Congressional Republicans quickly pounced on the Democrats' plan as a massive tax hike that would choke small businesses.

"During a deep economic recession, it is criminal malpractice for Democrats to push a government takeover of health care and a new small-business tax that will destroy more American jobs," House Minority Leader John Boehner, R-Ohio, said in a statement.

Scott Hodge, the president of the nonprofit Tax Foundation, a Washington-based nonpartisan research center, called the surtax "economically stupid." He said it would affect about 1.5 million taxpayers, many of whom operated small businesses and paid individual taxes rather than corporate taxes.

The U.S. Chamber of Commerce also denounced the proposal, calling it a sure way "to kill the goose that lays the golden egg."

House Majority Leader Steny Hoyer, D-Md., expressed doubt that the surtax would have a huge impact on small businesses.

"I don't know many small-business men or women who are making themselves $280,000, so I am not sure that very many small businesses are going to be affected by this," Hoyer said. "But we are committed to paying for health care reform. The Senate is committed to paying for health care reform. . . . That is one option that has been proposed."

Democratic leaders were fuzzy Tuesday on other financing options.

"We're committed to other ways of holding down the cost," said Rep. Henry Waxman, D-Calif., the chairman of the House Energy and Commerce Committee. "Having said that, we cannot hold down the cost sufficiently in health care to do all that we want to do, so we are going to increase revenue to help pay for this major reform."

President Barack Obama has implored the House and Senate to vote on health care overhaul legislation before their August recess, and House Democratic leaders said they intended to do so.

"We will work through some of the differences we have among the members, both Democrats and Republicans, with the objective that we will have a bill," Waxman said. "We cannot allow this issue to be delayed. We cannot put it off again. We cannot — quite frankly, cannot — go home for a recess unless the House and the Senate both pass bills to reform and restructure our health care system."

The bill's primary goal is to broaden health care coverage to almost 50 million Americans who don't have health insurance. It also aims to slow the rising cost of medical care and improve the effectiveness of the health care system.

"There will be no more co-pays or deductibles for preventative care; no more rate increases because of pre-existing conditions or because of your gender or where you happen to work," said Rep. George Miller, D-Calif., the chairman of the House Education and Labor Committee. "There will be an annual cap on your out-of-pocket expenses. Group rates will be available for individuals who have to purchase insurance for themselves. Guaranteed and affordable oral, hearing and vision care for our children. . . . Your choices will be protected and enhanced."

Obama praised the House effort Tuesday, proclaiming that it will fix "what's broken about our health care system" and will provide coverage to an estimated 97 percent of Americans.

The Senate is proceeding more slowly than the House is on health care, with rival bills moving through two committees.

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