President Barack Obama wants to boost income taxes for the wealthy to pay for tax cuts for everybody else. He wants to limit the deductions that high-income families take for mortgage interest and charity contributions to help pay for providing more people with health insurance.
House Democrats are planning to hit the wealthy with even higher income taxes to pay for their version of a health-care overhaul.
Between the two plans, a family of four with an income of $5 million a year would see its annual income taxes skyrocket by more than $440,000. A similar family making $800,000 a year would get a tax increase of $30,000, according to an analysis by the financial services firm Deloitte Tax.
"I still think being wealthy is better than being poor," Clint Stretch, who heads tax policy at Deloitte Tax, said with a touch of understatement. "But this is a pretty high proposed tax burden."
It's a big change from pastTaxing the rich to pay for health insurance would represent a significant departure from the way Americans have financed safety net programs in the past.
Both Social Security and Medicare are supported by broad-based payroll taxes. Although the rich pay more — they have bigger incomes — the burden is shared by the middle class and even the working poor.
By contrast, the health-care plan working its way through the House would impose $544 billion in new taxes over the next decade on just 1.2 percent of households — joint filers making more than $350,000 a year.
The bill would impose a new 5.4 percent income surtax on couples making more than $1 million a year, starting in 2011. Couples making more than $350,000 would have to pay a surtax of 1 percent tax, while those making more than $500,000 would pay a 1.5 percent surtax.
If certain savings in the health-care system were not achieved by 2013, the surtax would rise to 2 percent for families making more than $350,000 and to 3 percent for those making more than $500,000.
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