Health Care Plan Hits Rich With Big Tax Increases

STEPHEN OHLEMACHER

WASHINGTON (AP) — The typical family would be spared higher taxes from the House Democratic plan to overhaul health care, and their low-income neighbors could come out ahead.

Their wealthy counterparts, however, face big tax increases that could eventually hit future generations of taxpayers who are less wealthy.

The bill is funded largely from a 5.4 percent tax on individuals making more than $500,000 a year and couples making more than $1 million, starting in 2011. The tax increase would hit only 0.3 percent of tax filers, raising $460.5 billion over the next 10 years, according to congressional estimates.

But unlike other income tax rates, the new tax would not be indexed for inflation. As incomes rise over time because of inflation, more families — and more small business owners — would be hit by the tax.

"Twenty years from now, we're going to see more and more small businesses ensnared into paying higher taxes," said Rep. Dave Camp of Michigan, the top Republican on the tax-writing House Ways and Means Committee.