In yesterday's diary I posited that the Obama Administration lacks any clear vision for tax policy. I suggested that there is a principled way to pay for health care reform and they had not found it. The method they have chosen will ultimately lead to higher taxes on the working middle class as commentators have already noted. The best option would be to expand the existing tax we have to fund health care in a way that will make it fairer.
Currently employees, employers and the self-employed pay a 2.9% tax on all earned income to fund Medicare. The self-employed pay the whole tax and the employees and employers split the cost. The Medicare Tax is thought of as part of the social security tax, but in reality is very different. This tax can be expanded in a way that will make the tax system fairer, and meet other principles that our tax system should follow. Find out how below the fold.