President Joe Biden this week called for higher taxes on wealthy Americans to boost Medicare as part of his 2024 budget, aiming to help fund the program for at least 25 years.
The plan would increase the net investment income tax from 3.8% to 5% for earnings of more than $400,000, including regular income, capital gains and so-called pass-through business income, which flows to individual tax returns, according to the White House.
Enacted through the Affordable Care Act, the net investment income tax currently applies to earnings above $200,000 for single filers and $250,000 for married couples filing together.
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“Since Medicare was passed, income and wealth inequality in the United States have increased dramatically,” the White House said in a fact sheet. “By asking those with the highest incomes to contribute modestly more, we can keep the Medicare program strong for decades to come.”
The plan also aims to expand Medicare’s ability to negotiate prescription drug prices beyond the measures enacted through the Inflation Reduction Act.
Biden’s plan, however, is unlikely to pass in the Republican-controlled House of Representatives.
The full budget will be released Thursday.
The future of Medicare and Social Security
The proposal comes amid a debate over the future of Medicare and Social Security as Congress faces a looming debt crisis. Without a debt ceiling increase from Congress, the U.S. Department of the Treasury will exhaust its resources to stop a debt default sometime between July and September, according to the Congressional Budget Office.
As lawmakers grapple with the decision of whether to raise the debt ceiling, there are concerns about Social Security and Medicare cuts, despite support to preserve the programs during Biden’s 2023 State of the Union address in January.
House Speaker Kevin McCarthy said Social Security and Medicare should be “completely off the table” during debt ceiling negotiations, in a January interview with CBS’ “Face the Nation.”