The White House recently released a fact sheet outlining some of President Joe Biden’s tax and spending proposals. Among those proposals is a plan to increase the Medicare payroll tax from 3.8% to 5% on both earned and unearned income in excess of $400,000. The proposed tax increase is a part of the president’s budget proposal, which contains several provisions designed to keep the Medicare insurance program solvent through at least 2050.
We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about Biden’s latest proposal to increase the Medicare payroll tax for higher-income taxpayers.
Below is a summary of the debate that ensued between the two professors.
Their Votes:
Their Reasons:
Bloink: The Medicare program is a government-subsidized system that provides critical health coverage benefits for each and every American. It’s absolutely essential that we take steps to keep the program solvent. Unfortunately, it’s the lowest-income taxpayers who end up paying a much higher portion of their income toward the taxes that keep this program running.
That’s because lower-income taxpayers receive all of their income from employment — and, unlike the wealthy, don’t have the opportunity to use asset sales and other techniques to generate income that is not taxed at the higher ordinary income tax rates to which payroll taxes apply.