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Democrats at odds on financing healthcare.

Byline: The New York Times News Service

WASHINGTON Eoe1/4" House and Senate Democrats have appeared to be on a collision course over how to pay for a sweeping overhaul of the nationEoe1/4aos healthcare system, with the House planning to propose an income tax increase on the wealthiest Americans, an idea that Senate negotiators have all but dismissed as unworkable.

Paying for the roughly $1 trillion, 10-year cost of the health care legislation is arguably the biggest hurdle confronting lawmakers and the White House as they pursue President barrack ObamaEoe1/4aos top policy goal of extending health coverage to all Americans and curtailing the steep rise in the cost of medical care.

Sales tax on sodas

Senate negotiators had been eyeing a tax on some employer-provided health benefits but shifted course this week after Senate majority leader Harry Reid and other top Democrats voiced opposition. House Speaker Nancy Pelosi has said that the House Bill would not tax those benefits. Instead, the House Ways and Means Committee was said to be nearing agreement on an income tax surcharge of 2 per cent or more on Americans with the highest incomes Eoe1/4" those earning more than $250,000. The surtax would rise for those earning $500,000 and rise again for those earning more than $1 million.

At the same time, aides said that the House was moving away from other ideas, including a proposed sales tax on sodas and other sugary drinks and a new payroll tax of 0.3 per cent to be paid by employees and employers. The White House has not expressed a position on the surtax, but lawmakers said they had heard no objections so far.

The chief of staff, Rahm Emanuel, who visited the Capitol twice this week to discuss health care proposals with House Democrats, has said Obama would prefer that money to pay for the legislation come from within the health care system. But unlike a tax on employer-provided benefits, which Obama opposed during the presidential campaign, a tax on the wealthy would be in keeping with his promise not to raise taxes on Americans earning less than $250,000 a year.

Array of options

Meanwhile, Senate negotiators went back to the drawing board and were looking at an array of options. And they seemed to be narrowing their focus on a plan that would tax only the most generous employer-provided health plans Eoe1/4" those worth $25,000 or more a year Eoe1/4" as well as a modified limit on tax deductions proposed by Obama.

The president, in his initial budget, had called for capping certain deductions, including those for charitable contributions, at the 28 per cent income tax bracket, an idea initially rejected by a number of Democrats in Congress

But some lawmakers who opposed Obama at that point said they were willing to consider a higher limit Eoe1/4" at the 35 per cent bracket Eoe1/4" that could still generate roughly $90 billion in revenue over 10 years to help pay for the health care overhaul, presuming the highest tax bracket reverts to 39 per cent if the Bush tax cuts are allowed to expire.

The tax on more generous health insurance plans was projected to generate another $90 billion, and would bring Senate negotiators, led by Max Baucus, Democrat and chairman of the Finance Committee, more than halfway to the $320b in revenue that they had expected from a wider tax on employer-provided benefits. Lawmakers taking part in the negotiations said Republicans and several moderate Democrats would oppose an income tax surcharge on the wealthy.

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Publication:Times of Oman (Muscat, Oman)
Date:Jul 11, 2009
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