(Dow Jones) Senate Democrats are weighing increasing Medicare payroll taxes on wealthy Americans to plug a financing gap in a health-care overhaul bill, say people familiar with discussions.
Senate Majority Leader Harry Reid (D., Nev.) is considering increasing the 1.45% employee share of the Medicare tax on wages by 0.4% to 0.5%, according to a Senate aide.
Such an increase could raise around $40 billion, the aide said, as Reid struggles to craft a health bill that will meet the demands of his 60-member Democratic caucus and not add to the deficit.
The additional tax would apply only to wage income above $200,000 for individuals, or $250,000 for married taxpayers filing jointly. That is intended to stay in line with President Barack Obama's pledge that he wouldn't increase taxes on the middle class.
The Associated Press first reported that Reid is considering a Medicare tax increase late Wednesday.
Reid spokesman Jim Manley declined to comment.
The current Medicare payroll tax rate is 2.9% of wages, with the employee paying half and the employer paying the other half.
Reid is waiting for cost estimates from the Congressional Budget Office on the health bill, before making some key final decisions about the package.
He is combining an $829 billion plan from the Senate Finance Committee and a $645 billion bill from the Senate Committee on Health, Education, Labor and Pensions.
Democratic leaders want to hold a December Senate vote on the health bill.