Last updated on July 18th, 2023 at 02:03 pm
President Biden’s plan to save Medicare raises taxes on the wealthy and eliminates a loophole that allows the rich to hide income from Medicare taxes.
According to a White House Fact Sheet provided to PoliticusUSA:
The proposals in the President’s Budget would extend the solvency of Medicare’s Hospital Insurance (HI) Trust Fund by at least 25 years, the Medicare Office of the Chief Actuary estimates. While the most recent Medicare Trustees Report projected that the HI Trust Fund would be insolvent in 2028, the President’s Budget would extend solvency at least into the 2050s.
Modestly increasing the Medicare tax rate on income above $400,000. The Budget proposes to increase the Medicare tax rate on earned and unearned income above $400,000 from 3.8 percent to 5 percent. Since Medicare was passed, income and wealth inequality in the United States have increased dramatically. By asking those with the highest incomes to contribute modestly more, we can keep the Medicare program strong for decades to come.
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Closing loopholes in existing Medicare taxes and dedicating the Medicare net investment income tax to the HI Trust Fund. High-income people are supposed to pay a 3.8 percent Medicare tax on all of their income, but some high-paid professionals and other wealthy business owners have managed to shield some of their income from tax by claiming it is neither earned income nor investment income. The Budget would ensure that Medicare taxes apply to incomes over $400,000 per year, without loopholes. It would also dedicate the revenue from the Medicare net investment income tax to the HI Trust Fund, as originally intended.
A huge problem with funding these important programs is that the taxable income threshold is currently $160,200. The burden of funding Medicare is being carried by middle and lower-income people, even though more wealthy people are eligible and often utilize the program.
Everyone has long known what the fix is for Medicare, but Republicans have blocked it for decades because their goal is to destroy the program. The answer isn’t to cut Medicare but to ensure people pay their fair share.
Republicans offer lots of empty talk on not cutting Medicare, but President Biden has a plan and is willing to fight to protect it for future generations.
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Member of the Society of Professional Journalists and The American Political Science Association
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