Citizens for Tax Justice proposal mulled

We recently linked to proposals from our friends at Citizens for Tax Justice in the United States on how to pay for Medicare reform - arguably President Barack Obama's biggest domestic project in the long term. It might cost a trillion dollars, some analysts reckon. Bloomberg now reports on a new proposal in the Senate Finance Committee:

"The proposal, modeled after a plan released this week by Citizens for Tax Justice, would force people living off investments to contribute taxes to the health-care system, said Steve Wamhoff, legislative director for the Washington research group. It was raised yesterday in a closed-door meeting of Finance Committee Democrats, according to people in the room.

'If the only income Paris Hilton gets is capital gains, stock dividends, interest and other types of investment income, currently she is completely exempt from the one big tax we have right now that is dedicated to health care,” Wamhoff said. “We’re saying that probably doesn’t make sense.'"

And this could be big, big money.

"The move would potentially raise hundreds of billions of dollars in revenue over the next decade by boosting taxes by 1.45 percentage points on income from dividends, interest, partnerships and rentals, the people said. Dividends and long- term capital gains are now taxed at 15 percent.. . . The proposal would raise $500 billion over 10 years"

The lobbyists will attack this one for sure; all we can do is keep our fingers crossed.