Tax burden mounting for high earners

Levies in the healthcare law are just the beginning in President Obama's plan to bring balance. Politically, it may backfire.

By Janet Hook
LA Times
April 7, 2010

Reporting from Washington

With enactment of his signature healthcare law, President Obama has also made good on another major campaign promise: to ease the tax burden on middle-class Americans and pay for his domestic agenda by raising taxes on the wealthy. And for upper-income taxpayers, the tab for healthcare is just the beginning.

Families earning more than $250,000 and individuals making more than $200,000 will not only pay new healthcare-related taxes, but also face the likely expiration of upper-income tax cuts enacted under President George W. Bush. As a result, these Americans could be tapped for about $650 billion in additional taxes over the next 10 years -- a prospect that is loaded with both political opportunity and peril.

Obama and the Democratic majority in Congress, faced with the need to pay for healthcare while also trying to rein in the deficit, see a chance to limit some of the political and economic pain by putting more of the burden on the country's highest earners. But Republicans are already hammering Obama for leading a broad-scale redistribution of income that could threaten the economic recovery.

The healthcare overhaul calls for collecting more than $200 billion in new taxes over 10 years from upper-income taxpayers. Moreover, while Democrats plan to extend the Bush-era tax cuts for middle-income earners, they would let the income tax rates for top earners rise back to pre-Bush levels. That would raise nearly $443 billion over 10 years, by one estimate based on administration figures, which Democrats see as a pot of gold they can use to respond to the public clamor for deficit reduction.

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