| Trump (actual) | Biden Proposed | |
| Personal income tax top rate | 37% | 44.6% |
| Capital gains tax top rate (including NIIT) | 23.8% | 44.6% |
| Corporate tax | 21% | 28% |
| Tax on Unrealized Capital Gains | 0% | 25% |
| Medicare tax/NIIT | 3.8% | 5% |
| Stock Buyback tax | 0% | 4% |
Source: Committee to Unleash Prosperity
So, Biden proposes more taxation. What a shock.
But if taxation could “save “ Medicare, it would have been saved many years ago. Medicare taxes have gone up since its beginning and it still needs “saving”.
Besides that, Biden’s plan won’t reduce unfunded Medicare liabilities for future costs. Those future costs amount to tens of trillions of dollars. A dirty little secret, but not the only one.
Another dirty little secret is that, if Medicare runs out of money, its coverage simply ends. It’s promises are not enforceable in law. That will affect you, if you are on Medicare when that happens.
Medicare Advantage now enrolls 50% of Medicare-eligible Americans. It’s private insurance. Every senior who voluntarily enrolls in Medicare Advantage takes their liability with them and off Medicare.
So why believe more taxes will “save” Medicare? Why not instead more incentives for seniors to join Medicare Advantage?
Oh. I forgot. Because Joe Biden knows what’s best for us.
It’s hard to imagine taxing unrealized capital gains. It’s hard to realize raising the capital gains tax for that matter.
Still thinking about your comment above. Can it happen that unrealized capital gains shrink or disappear because of changes in financial or equity market conditions? If so, what happens in that case after a tax is paid? Would there be a tax refund? Also, the proposed taxes on unrealized and realized capital gains compound to 60% burden. That’s hard to imagine too.
I would guess there’s a fair number of taxpayers with incomes below $400,000 that will be zinged by these taxes.
The amount of money needed to “save Medicare” is not that easy to calculate.
Medicare Part A has a trust fund and a dedicated payroll tax. By 2028, the trust fund will very likely show annual deficits in the $50 billion range. New taxes could in theory solve this problem.
But Medicare B, C, and D have no dedicated taxes. They are funded about 15% with premiums paid by seniors and 85% through the Treasury general fund. A rough estimate is that these programs draw $400 billion a year — most of which is added to our national deficit. Not even Biden can claim that new taxes will balance the federal budget.
I have to respectfully disagree with John on the nature of Medicare Advantage. These plans (which I like and have one myself) may have private administration, but they are funded almost 100% with tax money. Each year the Medicare Advantage carrier gets a federal transfer of at least $12,000 per insured. If Medicare as a whole runs low on money, these plans are also broke.
“If Medicare as a whole runs low on money, these plans are also broke.”
That may be true. But that’s not a reason to try to “save” Medicare by levying more taxes. Because that tactic failed in the past. And there’s every reason to believe the same tactic will fail in the future. More revenue just feeds the beast. That doesn’t “save” Medicare and doesn’t fix it either.
Medicare first needs to be fixed. That might actually save it.
What does that mean? There has been no shortage of good ideas over the years. A few of those good ideas are repeated in the article posted immediately above,
For 40 years, those and similar ideas have been brushed aside by special-interest flyspecking, and by political hoots and howls about “ending” Medicare. The irony is that the end point of trying to fix Medicare with more taxation is that Medicare won’t be fixed and it won’t be saved, either.