{mosads}”What this bill does is close a loophole in the tax code,” Rangel said in a statement.

“Some self-employed individuals have organized their businesses in such a way that their earnings, what you and I would call ‘wages,’ can technically be called ‘profits’ and therefore are not subject to Medicare tax,” Rangel said.

The NEWT bill requires S-corporation shareholders to label all income from their business as earnings from self-employment, ensuring that money is subject to the 2.9 percent Medicare tax.

According to Rangel’s office, former House Speaker Gingrich (R-Ga.) earned nearly $3 million in 2010 from speeches and consulting work, then saved himself $69,000 on Medicare taxes by declaring $2.4 million of his income as profits and $444,327 as wages.

In 1995, former Democratic presidential candidate John Edwards did the same by declaring $360,000 of his $26.9 million income as wages and the rest as profits, Rangel’s office said. The move saved Edwards an estimated $600,000 in taxes.

The Joint Committee on Taxation estimated in 2009 that closing the S-corp loophole would raise $11.2 billion in revenue over 10 years.