President Barack Obama Says He Didn't Raise Taxes Once, But He Did

In an interview with Bill O'Reilly, President Barack Obama said, "I didn't raise taxes once. I lowered taxes over the last two years." However, fact checkers were quick to point out that the President has in fact raised a few taxes including those levied on cigarettes as well as the tax implications of health care reform. Income taxes? Sure, those have not gone up, but as for other taxes… President Obama seems to have a selective memory.

From PolitiFact.com:

Looking at the whole statement, he's both right and wrong. For clarity's sake, we're going to take Obama's statement in two parts. Here, we'll look at his statement, "I didn't raise taxes once." In a separate report, we'll look at his statement, "I lowered taxes over the last two years."

The idea that Obama did not raise taxes is just plain wrong. He signed legislation raising taxes on cigarettes and other tobacco products soon after taking office; that money goes to pay for children's health insurance programs. The law went into effect in 2009. He also signed the health care law, which includes taxes on indoor tanning that went into effect last year. (Regular PolitiFact readers will remember our fact-check of reality TV star Snooki and her complaint about the new tax last year.)

The new health care law also includes a tax on people who decide not to have health insurance, as an incentive for them to get coverage. The tax phases in gradually, starting in 2014. By 2016, the tax would be $695 per uninsured person up to a maximum of three times that amount, or $2,085. The law includes exemptions for people who can't find affordable insurance, and a few other special circumstances.

More significantly, the health care law includes new taxes on the wealthy, starting in 2013. Individuals who make more than $200,000 and couples that make more than $250,000 will see additional Medicare taxes of 0.9 percent. They will also, for the first time, have to pay Medicare taxes on their investment income at a 3.8 percent rate. (Current law is that all workers and employers split a 2.9 percent Medicare tax; the self-employed pay all of it.)

Read more here

IRS Releases Form to Help Small Businesses Claim New Health Care Tax Credit

According to their newest press release, the IRS released a new form today to help small business owners with the new health care tax credit. Specifically, the document will be used by businesses and tax-exempt organizations to calculate the small business health care tax credit when they file income tax returns next year.

The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.

The IRS has posted a draft of Form 8941 to this website. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.

Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.

The final version of Form 8941 and its instructions will be available later this year.

The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

Democrats Against ObamaCare

From the Wall Street Journal:

This wasn't a good week for ObamaCare, with Missouri voting to repeal the law and a Virginia judge refusing to dismiss a serious Constitutional legal challenge. Unlikely as it sounds, however, the repeal movement even came to include House Democrats.

To wit, the House voted last week to repeal one ObamaCare mandate. It might have been the first part of the bill to go over the side, except Democrats rigged the vote so that it failed, even though it got a majority.

The target was an ObamaCare footnote that could wreak havoc with more than 30 million small businesses. In the name of smoking out the illusory "tax gap" of unreported business income, Democrats snuck in a requirement that companies track and submit to the IRS all business-to-business transactions exceeding $600 annually. This 1099 reporting detail received no scrutiny until the IRS's National Taxpayer Advocate Nina Olson exposed the paperwork burden, which would produce no improvement in tax compliance.

Just before the House left town for August, Dave Camp, the ranking Republican on the Ways and Means Committee, offered an amendment that would have rescinded these mandates; as a "motion to recommit," it was guaranteed an up-or-down vote.

Speaker Nancy Pelosi and wingman Sander Levin were terrified that rank-and-file Democrats would defect, so they pulled their entire bill and reintroduced it a few hours later, with the basic Camp language included. In other words, not only was the House leadership unwilling to defend the 1099 provision but it took the lead in rolling it back, if only to prevent an embarrassing floor spectacle.

US Supreme Court To Consider Tax Rule On Medical Residents

Yesterday, the U.S Supreme Court decided they would hear a case regarding the payment of social security taxes for students of medical colleges and teaching hospitals. As the Wall Street Journal explains, the law being challenged is an old Treasury Department rule asserting that medical residents and other "full-time employees" cannot qualify for the general student exemption from Social Security taxes.

At stake is the tax treatment of medical residents nationwide, of which there are currently about 100,000, and $700 million in annual revenue to the federal government, according to court papers.

The Mayo Clinic and the University of Minnesota challenged the Treasury ruling and have also sought refunds for Social Security taxes they already paid on behalf of medical residents.

The St. Louis-based 8th U.S. Circuit Court of Appeals sided with the IRS in a ruling last June.

In their petition to the Supreme Court, the Mayo Clinic and University of Minnesota said four other federal appeals courts have sided with hospitals against the government on the issue. That leaves medical residents in the 8th Circuit--which covers Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota--subject to taxes that their peers elsewhere in the U.S. do not have to pay, they argued.

The Social Security tax represents 12.4% of wages. Half of the tax is paid by the employer and half by the employee. For a medical resident earning a $50,000 stipend, that represents $3,100 paid by the resident and $3,100 paid by the hospital.

Continue reading at Wall Street Journal.com…

Special Tax Incentives for Small Businesses to Provide Health Care, Hire New Workers

In their newest press release the IRS explains recent legislation that will provide incentives to small business owners wanting to provide health care, and hire new workers.

A variety of business tax deductions and credits were created, extended and expanded by the American Recovery and Reinvestment Act of 2009 (ARRA), this year’s Hiring Incentives to Restore Employment (HIRE) Act and the Affordable Care Act. Because some of these changes are only available this year, eligible businesses only have a few months to take action and save on their taxes. Here is a rundown of some of the key provisions.

New Health Care Tax Credit Helps Small Employers

The small business health care tax credit, created under the Affordable Care Act, is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

The credit takes effect this year and is generally available to small employers that pay at least half the cost of single coverage for their employees in 2010. The credit is specifically targeted to help small employers that primarily employ low- and moderate-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers. The maximum credit goes to smaller employers ­­–– those with 10 or fewer full-time equivalent (FTE) employees ––­­ paying annual average wages of $25,000 or less. The credit is completely phased out for employers with more than 25 FTEs or with average wages of more than $50,000.

Stealth IRS Changes Mean Millions of New Tax Forms

The IRS is going to have to make a few changes to the way the process tax returns because of the new health care reform law. As such, new forms are going to be introduced next year, including a new 1099-K, which requires financial firms to send clients as well as the IRS an annual run-down of every debit and credit card purchase.

According to CNN Money, the massive expansion of requirements for businesses to file 1099 tax forms that was hidden in the 2,409-page health reform bill took many by surprise when it came to light last month. But it's just one piece of a years-long legislative stealth campaign to create ways for the federal government to track down unreported income.

"It was actually something that we were following back under the Bush administration under the 2008 budget -- we started to see these kinds of rumblings about the 'tax gap' and whether or not businesses were paying their fair share," says Tom Henschke, president of the Pennsylvania-based SMC Business Councils, which was one of the first organizations to call attention to the health care amendment when it was introduced last fall. "So two administrations can claim credit for this."

The first tax-reporting expansion was buried in a different bill, the Housing Assistance Tax Act introduced by House Speaker Nancy Pelosi and signed into law by President George W. Bush in July 2008. Best known for its first-time homebuyers' credit, the bill also created a new addition to the family of 1099 tax forms: the 1099-K.

The 1099 is a catch-all series of IRS documents used to report non-wage income from a variety of sources like contract work, dividends, earned interest and pension distributions. The new 1099-K aims to shine a light on a currently hard-to-track payment stream: credit cards. Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year's transactions.

Continue reading at CNN Money.com…

Small Firms May Claim Health Tax Credit For Dental, Vision

According to the Treasury Department, small businesses in the U.S will be able to take advantage of a new federal tax credit for dental and vision health benefits. To qualify the business must have less than 25 employees, have average wages less than $50,000 and must pay for at least 50% of employees’ premiums.

According to the Wall Street Journal, the credit will offset employer health-care premiums paid on and after Jan. 1, 2010, under health-care legislation signed in March by President Barack Obama.

Firms may claim state health tax credits and other subsidies without having their federal health-care tax credit reduced, said Treasury Assistant Secretary for Tax Policy Michael Mundaca in a conference call with reporters.

Some small-business advocates criticized the tax credit Monday as too limited in scope. Bill Rys, tax counsel for the National Federation of Independent Business, said more than two-thirds of small firms will be excluded because they are too large or don't currently offer health insurance.

Eligibility for the credit is limited to firms with fewer than 25 full-time workers, or the equivalent, and average wages of less than $50,000. To qualify, firms must pay at least 50% of worker health-insurance premiums.

Continue reading at WJS.com…

IRS Offers Details on New Small Business Health Care Tax Credit

Back in April 2010, the IRS stated they sent post cards to millions of small businesses to alert them to the new Health Care Tax Credit. Even if you didn’t receive a post card, your small business may still be eligible. Also, if a small business is receiving state health care tax credits they may also qualify for full federal tax credit.

Paying for your employers to have health insurance, when you are a small business, can be a financial strain. The Health Care Tax Credit, part of the Affordable Care Act was designed to encourage small employers to offer health care insurance for the first time or to maintain coverage they already have. This new tax credit aims to ease the financial burden for small businesses while helping to get their employees properly insured or help them stay insured.

To provide new guidelines to help small businesses determine whether they are eligible for the new health care tax credit, the IRS issued a new form, Notice 2010-44. There is also a 3 step form that might be easier to use, to determine your small business’ eligibility. You can find that form here.

The credit is available to small businesses that pay at least half the cost of single coverage for their employees in 2010. For tax years 2010-2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax exempt organizations.

If you are a small business employing 10 or fewer full-time employees you will get the maximum credit. Keep the following information in mind:

Eligibility Rules

• Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
• Average annual wage. A qualifying employer must pay average annual wages below $50,000.
• Both taxable (for profit) and tax-exempt firms qualify.

Amount of Credit

• Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
• Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

If you are still unsure as to whether your business qualifies for any of these tax credits please contact a tax professional who can determine your eligibility for you. Don’t miss out on this important credit!

4 Million Will Pay Health Care Penalty

A Congressional Budget Office (CBO) report has been released, and if their predictions are correct 21 million Americans will be without health insurance in the year 2016. 4 million of them will likely be required to pay a penalty for being uninsured. According to this CNN article, the CBO is projecting the federal government could see a $4 billion per year revenue increase between 2017 and 2019.

High-income families making at least $96,000 will pay two-thirds of those fines, while families making between $24,000 and $96,000 will contribute nearly one-third of the funds collected.

Under the health care overhaul, which legislators passed in March, most U.S. residents will be required to purchase health care or pay a fine. By 2016, the penalty will be either a flat $695, or 2.5% of household income -- which ever is higher. The fines are capped based on income.

The CBO report noted the majority of the uninsured will not be subject to these fines because they belong to exempt groups including extremely low-income households, some religious sects and unauthorized immigrants.

AT&T Plans $1 Billion Charge For Health Care

According to the Huffington Post, AT&T inc. plans to take a $1 billion non-cash accounting charge during the first quarter due to the new health care reform package. The company has also warned it may cut benefits currently being offered to employees and retired workers.

The charge is the largest disclosed so far. Earlier this week, AK Steel Corp., Caterpillar Inc., Deere & Co. and Valero Energy announced similar accounting charges, saying the health care law that President Barack Obama signed on Tuesday will raise their expenses. On Friday, 3M Co. said it will also take a charge of $85 million to $90 million.

All five are smaller than AT&T, and their combined charges are less than half of the $1 billion that AT&T is planning. The $1 billion is a third of AT&T's most recent quarterly earnings. In the fourth quarter of 2009, the company earned $3 billion on revenue of $30.9 billion.

AT&T said Friday that the charge reflects changes to how Medicare subsidies are taxed. Companies say the health care overhaul will require them to start paying taxes next year on a subsidy they receive for retiree drug coverage.

White House spokesman Robert Gibbs said Thursday that the tax law closed a loophole.

Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits – including the subsidies – from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.

Americans Remain Skeptical Over Health-Care Revamp

From Bloomberg.com:

Americans remain skeptical about the health-care overhaul even after the U.S. House passed landmark legislation that promises to provide access to medical coverage for tens of millions of the uninsured.

At the same time, most say the government should play a role in ensuring everyone has access to affordable care, a Bloomberg National Poll shows. A majority also agree that health care is a private matter and consider the new rules approved by Congress to be a government takeover.

The poll found the percentage of Americans who favor the almost $1 trillion 10-year plan remained at about just four in 10 following the House vote on March 21 to send the bill to President Barack Obama, who signed it into law today.

“Anything called a ‘massive overhaul’ will be complicated, and it is hard for people to see what is in it for them,” said J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa- based firm that conducted the nationwide survey. “Even as Americans of all stripes agree there are problems with the current system, the escalating deficit makes them worry what the country can really afford.”

The poll of 1,002 adults was conducted March 19-22 and has a margin of error of plus or minus 3.1 percent. There was no meaningful movement of opinion the final night of interviewing, after the vote was taken.

Democratic lawmakers who approved the revamp over the unanimous objections of Republicans are counting on public support to grow once voters see the benefits of the legislation, which places new restrictions on insurers from denying coverage to people.

That Health-Care Tax Pledge

From the Wall Street Journal.com:

'If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime." So spoke Barack Obama at his first address to Congress in February. We're about to find out if the President cares about that promise as much he does passing a health-care bill.

Congressional Democrats have loaded up their health bills with provisions raising taxes on the middle-class by stacks and stacks of dimes. And Senate Democrats on Tuesday made clear they won't be bound by the President's vow; 54 voted to kill Idaho Republican Mike Crapo's amendment to strip the bill of taxes on families earning less than $250,000 and individuals earning less than $200,000.

Those tax hits include a mandate of up to $750 a year for Americans who fail to purchase health insurance; new levies on small businesses (many of which file individual tax returns) that don't offer health care to employees; new tax penalties on health savings accounts and flexible spending accounts; and higher taxes on medical spending, including restrictions on medical itemized deductions, as well as taxes on cosmetic surgery. A Senate Finance Committee minority staff report finds that by 2019 more than 42 million individuals and families—or 25% of all tax returns under $200,000—will on average see their taxes go up because of the Senate bill. And that's after government subsidies.

This profusion of tax hikes is central to the Democratic fiction that the Senate bill is budget neutral. And because many Senate Democrats are cool to the House proposal to fund legislation with a surtax on the "wealthy," many of these middle-tax hikes will likely remain in final legislation. Yet President Obama is embracing the bill.

Democrats are instead trying to claim that some taxes really aren't taxes. The President in September engaged in a debate with ABC's George Stephanopoulos, with the President arguing that the individual mandate isn't a tax since it is for the good of America. Michigan Senator Debbie Stabenow says increasing the amount of medical expenses a person must accumulate before deducting them also isn't a tax because "most Americans" don't itemize. Except the millions of middle-class Americans who do. Democrats have argued their restrictions on health savings accounts simply close "tax loopholes" and therefore also aren't new taxes.

Soft Drink Makers Launch Anti-Tax Ads

From UPI.com:

U.S. soft drink makers say they have launched a $2 million advertising campaign to counter moves to fight obesity and fund health care by taxing sugary soda.

The American Beverage Association has joined forces with the National Restaurant Association and the Grocery Manufacturers Association to fight the consideration of any such taxes, building a coalition of groups called Americans Against Food Taxes, USA Today reported Monday.

The newspaper says the ads depict soft drinks as "simple pleasures" being subjected to grasping government bureaucrats.

"People view it as an overreach of government when the tax code is used to tell them what to eat and drink," Kevin Keane of the beverage association told USA Today, adding that such taxes would hurt low- and middle-income people most.

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A Bid to Tax Health Plans of Executives

From NY Times.com:

Goldman Sachs is one of the nation’s richest banks, and hundreds of top Goldman employees have a health care package to match — one of the “gold-plated Cadillac” plans cited by those involved in the health care debate in Washington.

Goldman’s 400 or so managing directors and its top executive officers participate in the bank’s executive medical and dental program as part of their benefits, according to documents filed with the Securities and Exchange Commission. The program generally costs the bank $40,543 in premiums annually for each participant’s family.

Those taking part in the plan include the company’s chief executive, Lloyd C. Blankfein, and four other top officers, as well as managing directors, whose base salary is $600,000.

Goldman’s medical coverage entered the health care discussion on Sunday when David Axelrod, senior adviser to President Obama, cited the Goldman program as an example of the expensive benefits the administration might consider taxing to help pay for its health care program.

“The president actually was asked this the other day by Jim Lehrer, and what he said was that this was an intriguing idea to put an excise tax on high-end health care policies like the ones that the executives at Goldman Sachs have, the $40,000 policies,” Mr. Axelrod said.

Democrats Agree on Tax Hike to Fund Health Care

From the Washington Post.com:

House Democrats agreed yesterday to raise taxes on the wealthy to pay for a sweeping expansion of the nation's health-care system, proposing a surtax on the highest earners that could send the top federal tax rate toward 45 percent.

Beginning in 2011, the plan would target all income over $350,000 a year for families and $280,000 a year for individuals, Democratic sources said. The surtax would start at 1 percent, rise to around 1.5 percent for families earning more than $500,000, then step up again, to around 3 percent, for families earning more than $1 million, Democrats said.

That would raise about $550 billion over the next decade, Democrats said -- about half the cost of reforms that are expected to cost about $1 trillion. The surtax percentages could rise two years later, they added, if lawmakers think additional cash is needed to cover the cost of health-care reform.

The top federal tax rate currently stands at 35 percent, but Democrats have vowed to raise it to 39.6 percent next year, when cuts enacted during the Bush administration expire. Combined with other federal tax adjustments, the surtax could leave most taxpayers with annual incomes more than $350,000 facing top federal rates of at least 45 percent, said Robert Carroll, a senior fellow at the nonprofit Tax Foundation.

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Understanding The House Democrats’ Health Care Bill

Political blog KeithHennessey.com recently published an in-depth analysis on understanding the House Democrats’ new health care bill. I’ve included a clip from the article below, but be sure to check out his full post here.

Yesterday I posted and described the draft Kennedy-Dodd health care bill. Today I would like to do the same for an outline produced by House Democrats.

Here is a three-page outline of “Key Features of the Tri-Committee Health Reform Draft Proposal in the House of Representatives,” dated yesterday (June 8, 2009).

The three committees are:

The House Ways & Means Committee, chaired by Rep. Charlie Rangel (D-NY). The Health Subcommittee is chaired by Rep. Pete Stark (D-CA).

The House Energy & Commerce Committee, chaired by Rep. Henry Waxman (D-CA). The Health Subcommittee is chaired by Rep. Frank Pallone, Jr. (D-NJ).

The House Committee on Education & Labor, chaired by Rep. George Miller (D-CA). The Health, Employment, Labor and Pensions Subcommittee is chaired by Rep. Robert Andrews (D-NJ).

The document suggests this is a joint product of the three committees and/or their subcommittees. My sense, however, is that it is Speaker Pelosi who is driving the bus. This is in contrast to the Senate, where the committee chairmen (Kennedy/Dodd and Baucus) appear to have the pen, in less well-coordinated efforts.

Kennedy-Dodd and the House bill outline are remarkably similar. Whether this represents House-Senate coordination or parallel thought processes is unclear.

I think the easiest way for me to present the House bill outline is in comparison with the Kennedy-Dodd bill. So here my description from yesterday of the Kennedy-Dodd bill, with today’s comparison to the House bill outline in red. I hope it’s comprehensible and useful this way. If you read yesterday’s post, you can skim the text in black and focus on the new text in blue.

Here are 15 things to know about the draft Kennedy-Dodd health bill and the House bill outline.

1. The Kennedy-Dodd bill would create an individual mandate requiring you to buy a “qualified” health insurance plan, as defined by the government. If you don’t have “qualified” health insurance for a given month, you will pay a new Federal tax. Incredibly, the amount and structure of this new tax is left to the discretion of the Secretaries of Treasury and Health and Human Services (HHS), whose only guidance is “to establish the minimum practicable amount that can accomplish the goal of enhancing participation in qualifying coverage (as so defined).” The new Medical Advisory Council (see #3D) could exempt classes of people from this new tax. To avoid this tax, you would have to report your health insurance information for each month of the prior year to the Secretary of HHS, along with “any such other information as the Secretary may prescribe.”

The House bill also contains an individual mandate. The outline is less specific but parallel: “Once market reforms and affordability credits are in effect to ensure access and affordability, individuals are responsible for having health insurance with an exception in cases of hardship.”

2. The Kennedy-Dodd bill would also create an employer mandate. Employers would have to offer insurance to their employees. Employers would have to pay at least a certain percentage (TBD) of the premium, and at least a certain dollar amount (TBD). Any employer that did not would pay a new tax. Again, the amount and structure of the tax is left to the discretion of the Secretaries of Treasury and HHS. Small employers (TBD) would be exempt.

The House bill outline also contains an employer mandate that appears to parallel that in Kennedy-Dodd: “Employers choose between providing coverage for their workers or contributing funds on behalf of their uncovered workers.”

Continued here…

Democrats Weigh Health Mandate as Obama Urges Taxing Wealthy

According to Bloomberg.com the Obama Administration and Democratic leaders in Congress are looking to increase taxes on the wealthy in this country in order to pay for a health care overhaul. Check out the text of their article below.

The Obama administration stepped up efforts to influence health-care legislation today as advisers David Axelrod and Austan Goolsbee appeared on television talk shows to discuss the issue.

The president is trying to avoid broad-based levies such as a Senate proposal to tax some employer-provided health benefits Axelrod said. Instead he is urging lawmakers to reconsider limiting all tax deductions for Americans in the highest tax brackets.

“He made a very strong case for the proposal that he put on the table, which was to cap deductions for high-income Americans, and he urged them to go back and look at that,” Axelrod said on the CNN’s “State of the Union.” Goolsbee, appearing on “Fox News Sunday,” said Obama is “mindful” about how “ordinary Americans are able to foot the bills” and never proposed taxing employee benefits.

House Democrats are weighing a new proposal in response to Obama’s call for legislation to be enacted by August. An outline of the plan obtained by Bloomberg News would require Americans to have insurance with some exceptions.

It would probably exempt those who can prove they can’t find an affordable policy. There could be a tax penalty for those with adequate financial resources who don’t elect to get insurance, according to the outline.

The outline suggests consumers who have individual health insurance policies that they like could keep them. Still, it says that “by and large” the nation’s market for individually purchased health insurance policies would move to a new federally operated exchange. It would permit both individuals and employees of small firms to buy policies at less expensive group rates.

“States will have the option to run a state exchange but the default will be a national exchange,” according to the outline.

Karen Lightfoot, a spokeswoman for House Energy and Commerce Committee Chairman Henry Waxman, a California Democrat whose panel is working on a proposal, said the document that is circulating is not the official work of the committee.

All House Democrats will be briefed June 9 on the details of a single piece of legislation that three House committees will work on, with the House slated to act by the end of July. The proposal is part of a broader push by Democrats in Congress to complete a revamp of the U.S. health-care system by an early fall timetable set by Obama.

Obama Willing to Consider Tax on Employer-Paid Health Benefits

President Barack Obama, who has been looking for good ways to help fund an expansion in health care, said he would consider taxing employer-paid benefits. Check out the following article on the story courtesy of the Washington Post.

President Obama, in a pivot from some of his harshest campaign rhetoric, told Democratic senators yesterday that he is willing to consider taxing employer-sponsored health benefits to help pay for a broad expansion of coverage.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said Obama expressed a willingness to consider changing the existing tax exclusion. The decision would probably anger liberal supporters such as labor unions, but such a tax change would raise enormous sums of money as Congress and the White House are struggling to find the estimated $1.2 trillion needed to pay for health-care reform over the next decade.

"Yeah, it's something that he might consider," Baucus told reporters after the meeting between Obama and Democratic lawmakers. "That was discussed. It's on the table." Obama had summoned about two dozen senators to the White House to keep up the pressure to enact a comprehensive health-care overhaul this year.

White House officials moved quickly to clarify that taxing the health insurance provided by businesses is not Obama's first choice, but aides refused to rule out the possibility.

"The president made it clear during the campaign that he has serious concerns about taxing health-care benefits, and he has introduced his own revenue proposal, which he reiterated in today's meeting," spokesman Reid Cherlin said.

Obama instead urged senators to reconsider his proposal, which would raise federal revenue by reducing itemized deductions such as charitable contributions and mortgage payments for the wealthiest Americans, according to one adviser in the meeting. Obama included that idea in his budget, reporting that it would raise $317 billion over 10 years, a sizable "down payment" on the cost of health-care reform. But Congress immediately labeled the proposal a non-starter.

Private-sector businesses spend about $518 billion a year on their workers' health insurance, benefits that are not taxed. If workers had to pay taxes on their health coverage, it would raise $246 billion in revenue each year, according to the congressional Joint Committee on Taxation.

Tax treatment of employer-sponsored health care cuts across party lines: Prominent Republicans such as Sen. Judd Gregg (N.H.) support imposing a tax on certain health plans, while Democrats such as Sen. Sherrod Brown (Ohio) say that a tax would unfairly hurt middle-class workers with good benefits.

Health analysts from across the political spectrum have pressed for changing the tax treatment, arguing in part that the exclusion provides the greatest tax relief to high-salaried workers with generous insurance plans.