Medicare payroll tax will go unchanged

The Medicare payroll tax in the reconciliation bill the Senate will soon debate will go unchanged even though it is not indexed for inflation and will create headaches for lawmakers down the road. 

Senate Finance Chairman Max Baucus (D-Mont.) said the indexing issue will be addressed in the future, possibly before its 2012 implementation date. 

"We'll deal with that later, not now -- not now," he said, adding, "We're not going to make any changes, not on the reconciliation bill. We've got to get this thing signed, sealed and delivered."

The tax is expected to raise $210 billion over the next 10 years, according to the Joint Committee on Taxation. 

Sen. Olympia Snowe (R-Maine) said the tax is "akin" to the alternative minimum tax because it is not indexed for inflation.

Congress creates a "patch" annually to ensure that the AMT does not affect middle-class taxpayers. Debate over the issue is usually prolonged because the patch is very expensive and requires offsets. 

Lawmakers agreed a similar patch for the medicare tax could be in order to keep it from creeping into middle-income brackets.

"It's a significant issue," Snowe told The Hill. 

Several sources speculated that the medicare tax will be materially altered before its implementation date. Senate Budget Chairman Kent Conrad (D-N.D.) is not one of them. 

"I think the reality of what the country confronts will assure that these provisions that are now law will actually be implemented," he told The Hill. 

While the medicare tax is not yet law, Conrad expected it would be soon.