NCPA - National Center for Policy Analysis


November 25, 2009

In order to pay for a massive health care bill (H.R. 3590), Senate Majority Leader Harry Reid (D-Nev.) has created a host of new taxes that will total $370.2 billion in the next ten years, says the Heritage Foundation.

The most shocking tax increase is a payroll tax increase that will permanently sever the link between the Medicare payroll tax and its contributions to Medicare, says Heritage:

  • This payroll tax increase of 0.5 percent on earnings above $200,000 for singles and $250,000 for joint couples will contribute money to the general fund for health care instead of directly for Medicare payments.
  • This change means that Medicare taxes are no longer solely dedicated to social insurance and safeguarding Medicare.
  • Instead, Medicare payroll taxes will be used for other government programs.

It is ironic that the shift emerges from the liberals as they have long been worried about turning social insurance programs into welfare programs that redistribute wealth.  The Reid payroll tax is a huge step down the road of using social insurance payroll taxes as regular taxes to transfer income, says Heritage.

Sen. Reid also imposes a host of new taxes on the health insurance industry.  These range from taxes on branded drug companies to the makers of medical devices.  The effect of these new taxes will be to increase medical costs and premiums for individuals.  These taxes do nothing but raise the cost of health care as the companies will pass on these tax increases to the consumers of health care, says Heritage.

Source: Rea Hederman, "The Senate Health Bill: Higher Taxes from Harry Reid," Heritage Foundation, November 19, 2009.

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