House Dems look at taxing the rich for health care

[July 09, 2009]  WASHINGTON (AP) -- House Democrats at work on health legislation are narrowing in on an income tax surcharge on the highest-paid wage earners to help pay the cost of subsidizing insurance for the 50 million who lack it.

Pushing to complete a comprehensive health care bill by Friday and bring it up for committee votes next week, House Democrats abandoned earlier money-raising proposals, including a payroll tax. They planned to meet behind closed doors Thursday to fine-tune the details.

The action in the House stood in contrast to the Senate, where Democrats edged away from their goal of passing health care legislation by early August amid heightening partisan controversy over tax increases and a proposed new government role in providing insurance to consumers.

As discussed in the tax-writing House Ways and Means Committee, the surtax would apply to individuals with adjusted gross income of more than $200,000 and couples over $250,000, according to officials involved in the discussion. Most spoke on condition of anonymity because the talks were private.

In addition, key lawmakers are expected to call for a tax or fee equal to a percentage of a worker's salary on employers who do not offer health benefits.

Ways and Means Chairman Charles Rangel, D-N.Y., has said his committee needs to come up with $600 billion in new taxes to deliver on President Barack Obama's goal of sweeping changes to the nation's health care system to bring down costs and cover the 50 million uninsured. Hundreds of billions of dollars more would come from cuts to Medicare and Medicaid to pay for legislation expected to cost around $1 trillion over 10 years.

Top administration officials, including White House chief of staff Rahm Emanuel, conferred with Rangel's committee Democrats on Wednesday as they met throughout the day.

"They know what I'm thinking about and I have no reason to believe I'll have any problems with them on that part of the bill," Rangel said of the tax proposals.

Rep. Shelley Berkley, D-Nev., a member of the panel, said the proposed surtax on high-income taxpayers appealed to her and others as a way to avoid a "nickel-and-dime" approach involving numerous smaller tax increases.

Lawmakers cautioned that no final decisions have been made, either by the tax-writing committee or by the Democratic leadership, which hopes to have legislation drafted by the end of the week and through the House by month's end.

Smaller tax options remained possibilities, depending on the overall cost of the legislation, including a tax on sugared soft drinks and ending a tax break that drug companies receive for advertising.

In the Senate, New York Democrat Chuck Schumer told The Associated Press that he believes the "ultimate goal" is to have a bill by the end of the year that is signed into law by the president.

Separately, Republicans who met with Senate Majority Leader Harry Reid, D-Nev., said he expressed flexibility on the timetable, indicating that he was willing to allow more time before legislation is brought to the floor.

Any failure to meet the August goal would be a setback -- but not necessarily a fatal one -- for Obama's attempt to achieve comprehensive health care legislation this year. A group of Democratic and Republican senators led by Finance Committee Chairman Max Baucus, D-Mont., is still working toward a bipartisan deal, but that effort appeared set back by concerns Reid and other leading Democrats expressed this week over a tax on health care benefits that Baucus was considering to pay for it.

The White House expressed its support Wednesday for the emerging House legislation, noting that the Congressional Budget Office had said planned changes to Medicare would save more than $500 billion over 10 years. A significant part of that money would come from the steep reduction in subsidies paid to insurance companies that offer private Medicare coverage.

But in a letter to Rangel and other committee chairmen, budget director Peter Orszag urged additional cuts in projected Medicare and Medicaid spending, as well as consideration of a plan to give an independent commission a greater role in setting future payments rates for Medicare health care providers -- something that could weaken Congress' involvement.

[Associated Press; By ERICA WERNER]

Associated Press writers David Espo, Ricardo Alonso-Zaldivar and Alan Fram contributed to this report.

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