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Health finance plan ups taxes on rich

House Democrats scrambling for ways to pay for overhauling health care would raise taxes on the wealthiest Americans to levels not seen since the 1980s, breaking one of President Obama's campaign pledges.

The tax increase would be limited to the top 1.2 percent of earners -- families that make more than $350,000 a year. But it would raise a total of $544 billion over the next decade, covering a little more than half the cost of the health care plan.

The bill unveiled by House Democratic leaders Tuesday would create three new tax brackets for high earners, with a top rate of 45 percent for families making more than $1 million. That would be the highest income tax rate since 1986, when the top rate was 50 percent.

The plan would honor Obama's campaign promise not to raise taxes on families making less than $250,000. But it would break an Obama pledge that no one -- including the wealthy -- would pay higher taxes than they did in the 1990s. The pledge, as listed on Obama's campaign Web site, was: "No family will pay higher tax rates than they would have paid in the 1990s."

Democrats argue that high-income families fared well under President George W. Bush's two terms as their taxes dropped and their incomes soared, giving them the ability to absorb higher taxes. Republicans argue that the tax increases would hurt small business owners who typically pay their business taxes on their individual returns.

Rep. Charles Rangel, chairman of tax-writing House Ways and Means Committee, called the plan "the moral thing to do."

"This innovative bill provides a uniquely American solution to control costs and put patients first without burdening future generations with debt," the New York Democrat said.

Obama's strategy throughout the health care debate has been to publicly encourage the efforts of congressional Democrats even as they debate proposals that would break his campaign promises. The goal is to keep lawmakers working toward a package that expands coverage and slows the growth in costs.

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