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Sen. Baucus’s List of Possible Revenue Targets

2 min readBy: Gerald Prante

The Politico has a detailed listing of all the possible revenue options to pay for higher health care spending that Sen. Baucus is looking at. Here’s Politico’s list:

Broaden the 1.45-percent Medicare taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on earned income to “passive income,” which could include money from capital gains, rental properties and businesses that do not require direct participation. This could raise $100 billion.

Levy a five-percent surtaxA surtax is an additional tax levied on top of an already existing business or individual tax and can have a flat or progressive rate structure. Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services. on individuals who earn more than $500,000 and couples that make $1 million.

Tax health benefits at a higher level than had been considered. Two scenarios are in play. Taxing plans worth more than $20,300 for a family and $8,300 for an individual could raise $240 billion. Increasing the cut-off to plans worth more than $25,000 would bring $90 billion.

Capping the tax break on itemized deductions at 28 percent, as President Barack Obama had proposed, or freezing the top deduction rate at 35 percent when the Bush tax cuts expire in 2010. The first scenario would raise $168 billion, while the second would collect $90 billion.

Issue tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. bonds to pay for the proposed Medicaid expansion, raising $75 billion.

Charge fees to pharmaceutical manufacturers, bringing in as much as $20 billion, and insurance providers, raising $75 billion.

Raise taxes on sodas and sugary drinks. A 3-cent hike could pick up $30 billion, and a 10-cent hike could make $100 billion. This one already appears out of favor: Many senators have specifically ruled out the sugar tax, and a Senate Democratic source said it was the one option that was clearly not gaining traction with committee members.

Later in the article:

[Charles] Schumer continued to rule out taxing health benefits – even at a higher rate.

“The big question there, and we asked it at the meeting: Does that still include middle class people?” Schumer said. “In some states, particularly with police and fire [workers], but not only with police and fire, you get up to that level. If it includes middle class people, which I think it may well, I think there would be a lot of concern about that.”

How many “middle class” families have a $20,000 health care plan? According to Sen. Schumer’s definition of middle class, which includes everybody not playing infield for the New York Yankees, maybe a lot. According to a reasonable definition of middle class, not many.