TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

House Democrats agreed yesterday to raise taxes on the wealthy to pay for more government control of the nation's health-care system, proposing a surtax that would send the top federal tax rate toward 45 percent. 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. There are additional increases in Medicare tax to apply to capital gains.

The Democrats controlling the House and Senate are lining up to support hefty tax increases in the midst of an economic downturn. Most increases under consideration would go into effect next year. Capital gains will have a "Medicare" tax. The top rate will exceed 40%. Higher income earners will face more penalizing tax increases. All of this will be done in the name of "health care reform."