OK, so Citizens for Tax Justice is being a bit unfair by targeting Hilton. After all, she has been working in recent years.
But the group makes a good argument that we should extend the individual portion of the Medicare payroll tax to unearned income like capital gains and investments.
To the extent that Hilton and her BFFs live off of stock dividends, interest payments, and investment income they are exempt from our nation’s only dedicated health care tax. The idea is getting a lot of play right now in the health policy blogosphere, and it was apparently debated behind close doors in the Senate Finance Committee, but thus far legislators have not publicly endorsed the idea.
CTJ estimates that the change could raise more than $390 billion over ten years — a hefty sum. Congress may give the idea another look as it puts together a deficit neutral health care bill.
You can read here about more ideas to raise revenues and make our tax system more fair to middle class families.