Senate Dems cool to House tax on rich

Senate Democratic leaders signaled reservations Sunday to a House proposal to tax the rich to raise $540 billion for healthcare reform.

“I think we are going to have a different approach,” Senate Majority Whip Dick Durbin (D-Ill.) said on ABC's “This Week.”

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“We understand we have to combine cuts and actual spending on healthcare, savings from hospitals, from doctors and health insurance companies along with new revenue.”

Sen. Chuck Schumer (D-N.Y.) said while there are some benefits to taxing only the wealthy, he was not convinced the surcharge proposed by House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) is the right solution.

“Obviously, the surcharge has a benefit, it meets the president’s goal of not taxing anybody below $250,000,” said Schumer, who sits on the Senate Finance Committee, which is holding hearings on proposed ways to fund the healthcare bill.

“But I think to negotiate in public when there are many different options is not going to be very helpful, so I’m not going to do that,” he said on NBC’s “Meet the Press.”

Rangel said Friday the House would propose raising taxes on couples earning more than $350,000 a year. He would impose surtax rates ranging from 1 percent to 3 percent on couples with annual earnings of $350,000, $500,000 and $1 million. Surtaxes are calculated by adding the relevant percentage to workers’ regular yearly tax bill.

The proposal would raise $540 billion over 10 years, Rangel indicated.

Democrats are struggling to find a way to pay for healthcare reforms that could cost in the neighborhood of $1 trillion. They’re doing so at a time of rising fiscal deficits, making their task that much more difficult.

President Obama’s decision to not raise taxes on those with incomes under $250,000 has made it even harder. Some Democrats would like to impose taxes on employee-provided healthcare benefits, but that would break Obama’s pledge.

Republicans and tax groups spent the weekend criticizing Rangel’s plan. Sen. Lamar Alexander (R-Tenn.) on Sunday deemed it a bad idea.

But Alexander, the chairman of the Senate Republican Conference, threw his support behind a proposal to tax the most munificent employer-provided health benefits.

“If you’ve got a Cadillac insurance plan and your employer gives you that, then some of it’s going to be taxed,” Alexander said on CNN’s “State of the Union”. “We can’t keep adding to the debt in the way we are.”

Generous plans have been deemed “Cadillac” plans if they are large and all-encompassing in their coverage. So far, the idea of taxing them has largely been backed only be Democrats. But the party is hardly united on the idea.

Sen. Debbie Stabenow (D-Mich.) objected to Alexander’s suggestion on CNN, saying that taxing employee benefits was “off the table.”

Sen. Judd Gregg (R-N.H.) said the reason that members of Congress are not considering taxing employee benefits is because it would cost them the support of the United Auto Workers labor union in their next election.

“I think the UAW’s calling the shots there,” Gregg said on CNN. “And that’s why it’s not on the table because they’ve got some very high-end health policies and they don’t want their union members to have to reduce those health policies.”