Dems: Tax rich to pay for health plan

WASHINGTON, July 11 (UPI) -- House Democrats say they plan to ask the richest Americans to help pay for healthcare reform through a $550 billion income tax increase over the next decade.

The proposal would impose a surtax on individuals who earn $280,000 or more in adjusted gross income and on couples earning more than $350,000, Rep. Charles Rangel, D-N.Y., told The New York Times.

Rangel, chairman of the House Ways and Means Committee, said the surtax, which would take effect in 2011, would raise $550 billion over 10 years, about half the cost of the healthcare reform legislation.

House Speaker Nancy Pelosi, D-Calif., and other leaders support the surtax, a Pelosi aide told the Times.

The Washington Post reported Saturday the proposal could push the top federal tax rate to nearly 45 percent. It now stands at 35 percent, but could climb to nearly 40 percent when Bush administration tax cuts expire next year, the Post said.

President Barack Obama, who has made healthcare reform his top priority, said at a news conference Friday he expected challenges in getting reform legislation passed.

"Whatever bill is produced has to be paid for," Obama said. "And that creates some difficulties, because people would like to get the good stuff without paying for it. And so there are going to be some tough negotiations in the days and weeks to come, but I'm confident that we're going to get it done."

Republicans criticized the proposed tax increase, saying it would hurt small businesses, the Times reported Saturday.

"In the middle of a serious recession, with unemployment nearing double digits, the last thing we need is a tax increase on small businesses, which will cost the American economy even more jobs," said Michael Steel, a spokesman House Republican leader Rep. John Boehner of Ohio.