Tuesday, July 14, 2009

[W]Rangling More from the Rich: Rep. Rangel's Plan to Fund Health Care

Charles Rangel (D-NY) has proposed additional surtaxes on wealthy Americans (defined as those earning over $280,000 ($350K if MFJ)). Surtax rates would be 1% at 280/350; 2% at 400/500 and 3% at $800,000/$1 million. Rangel estimates that the surtax would over one-half trillion, 2/3rds more than the controversial taxing of health insurance coverage paid by employers. Rangel was invited to meet at the White House and further explain his proposal over the weekend, but Senator Dick Durbin (D-IL) suggested that he planned a different strategy.

Surtaxes tend to have a short shelf-life; past uses include taxation for the Vietnam War and the "windfall oil profits tax." The obvious selling point of Rangel's proposal is that it takes the apparent burden of healthcare funding off the middle class. Potential disadvantages: extra taxes on the wealthy tend to be passed on to public by higher prices, lower wages, less hiring, etc. and the tax structure (rate points for unmarried taxpayers are at 80% for MFJs) provides some opportunity for Republicans to catagorize the surtax as "anti-marriage."


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