While the House has passed its healthcare bill, the Senate bill continues to sit on the shelf. Apparently, the Senate is waiting for the scoring of the proposed bill by the Congressional Budget Office. Essentially, scoring is the CBO's estimate of how much all of the will cost over the next 10 years. I would really like to see that excel spreadsheet.
New reports are coming out that Senate Majority Leader Reid is considering an increase in the Medicare tax from its current 1.45% as part of the bill. He is also considering the application of a new Medicare tax on capital gains.
In its current form the Medicare tax is applied to earned income (wages, etc.). Most wage earners pay the Medicare tax by withholdings on their wages. Self employed individuals pay it through the Self Employment Tax on their self employment income with their individual tax return. It is suggested that potential increases in the Medicare tax rate on earned income might only be applied to income in excess of $250,000. A Medicare tax on capital gains does not currently exist in the tax law. I guess wealth redistribution in the United States begins at $250,000.
A strange twist in the Senate bill is a reduction in the amount that taxpayers can contribute to flexible spending accounts. Many employees take advantage of flexible spending accounts to pay for qualifying healthcare expenses with pre-tax funds. Generally the maximum contribution to a flexible spending account is $5,000 per year. The Senate bill would reduce this maximum to $2,500 per year. This provision is all about raising additional revenue and is in effect an additional tax. Lowering the maximum contribution simply results in more of an individuals earnings being subject to income tax. I thought we wanted to encourage people to spend wisely on healthcare.
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