Lawmakers dilemma: should tax increases pay for health care overhaul?

As lawmakers disagree over which taxes to raise to pay for health care reform, they "also face another problem: They're confronting the fear that's made it hard to raise taxes for more than 30 years.

Republicans and moderate Democrats think that any tax increase is political poison back home," McClatchy Newspapers reports. "Republicans are pouncing on Democrats, charging that the party is eager to add a new tax burden to already-strapped constituents in the midst of a recession. … The current House Democratic plan would raise an estimated $543.9 billion over 10 years by imposing what it calls a "graduated surcharge" on higher-income earners." One criticism of the proposal is that "small businesses will be hurt. Surcharge backers cite data from Congress' Joint Committee on Taxation that indicate that 96 percent of small businesses wouldn't be affected."

"Another problem, said Sen. Kent Conrad, D-N.D., is that selling the surcharge as part of a health care overhaul is tough, because it's hard to explain to constituents how raising general tax rates affects health care. For all these reasons, said Sen. Olympia Snowe, R-Maine, 'the surcharge is not even on the table here,' in bipartisan negotiations among members of the tax-writing Senate Finance Committee"  (Lightman, 7/30).

The Wall Street Journal's Health Blog reports that "Americans are still OK with the idea of taxing rich people to pay for part of the big health-care overhaul now being debated in Washington. In the latest WSJ/NBC poll, 68% of respondents said raising taxes on families making more than $1 million a year was an 'acceptable' option" (Goldstein, 7/30).

Related: KHN's Julie Appleby examination of insurance tax options.


Kaiser Health NewsThis article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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