Tax News

CCH (cch.taxgroup.com) reports:

  The House Ways and Means Committee was expected to complete consideration late on July 16 of the America's Affordable Health Choices Bill of 2009 (HR 3200), which included a chairman's mark that made changes to the tax treatment of health savings accounts, spousal coverage and other provisions estimated by the Joint Committee on Taxation (JCT) to cost $6 billion. As expected, the health insurance reform measure ran into stiff opposition from Republican lawmakers, who labeled the bill a government takeover of medicine that would harm physician-owned hospitals, tax small businesses into oblivion and worsen the federal budget deficit.

  Democratic lawmakers voted against any attempt by Republicans to impose a week-long delay in order to consider the more than 1,000 page measure, which was introduced on July 14. They also brushed aside Republican concerns that the Congressional Budget Office has not completed an analysis of the cost of the legislation. Under HR 3200, approximately $544 billion in revenues would be raised through a surtax of 5.4 percent on married individuals with adjusted gross income (AGI) over $1 million beginning in 2011; a 1.5-percent surtax on incomes between $500,000 and $1 million; and a 1-percent surtax on incomes from $350,000 to $500,000. The measure is expected to be considered by the full House before the August recess.

  Speaking to reporters during her weekly press conference on July 16, House Speaker Nancy Pelosi, D-Calif., defended the bill's tax provisions, promising that the Medicare cost containment sections would sufficient to fund the measure. The tax increases, Pelosi insisted, would be used for deficit reduction. "I believe that we have an obligation to try to squeeze as much savings out of the system so that we can use as much of the tax of the high income people in our country to reduce the deficit," Pelosi said. "To the extent that we have the cooperation of those who we want to squeeze in the system, we can do less on the tax side." Pelosi said she had not yet seen a letter from House Democratic freshman lawmakers who are reportedly unhappy with the bill's surtax on wealthy taxpayers.

  However, Ways and Means member Wally Herger, R-Calif., charged that the massive tax increases in the bill are no substitute for real fiscal responsibility. He criticized the plans for raising taxes in order to spend even more on a public health care option that will force people out of the private insurance market. GOP concerns were unlikely to win the day however, since Democrats hold an 11-seat majority on the committee. Moreover, the bill is likely to be changed again to build more Democratic support before it reaches the House floor.

  By Stephen K. Cooper, CCH News Staff

Amendment in the Nature of a Substitute to HR 3200, America's Affordable Health Choices Act of 2009

JCT Description of an Amendment in the Nature of a Substitute to the Provisions of HR 3200, The America's Affordable Health Choices Act of 2009, JCX-32-09

JCT Estimated Effects of the Chairman's Amendment in the Nature of a Substitute to the Revenue Provisions of HR 3200, The America's Affordable Health Choices Act of 2009, Scheduled for Markup by the House Ways and Means Committee on July 16, 2009, JCX-33-09

HR 3200, America's Affordable Health Choices Act, Summary of Changes in the Chairman's Amendment in the Nature of a Substitute