Nonprofit Groups Urge Taxing the Wealthy to Help Finance Health Plan

More than 600 nonprofit, advocacy, religious, and labor groups have united to urge Congress to raise taxes on wealthy people to help pay for reshaping the health-care system and other national priorities — including possibly limiting the tax breaks for charitable deductions as proposed by President Obama.

“Today taxes are at a historic low relative to the size of the economy,” says a statement the groups sent this week to lawmakers. Tax cuts in the early part of the decade “disproportionately benefited the most affluent and powerful members of our society,” widened income inequality, added to national debt, and left the country ill-prepared to face its challenges, it says.

The groups call for measures like taxing wealthy households, assessing a “significant” tax on large estates, and closing corporate tax loopholes. They say they support the kind of measures outlined in documents prepared by Citizens for Tax Justice, an advocacy group for low- and middle-income taxpayers. (Those documents include one on revenue proposals and health-care financing.)

Among the items the tax group backs: President Obama’s plan to limit the tax savings for itemized deductions to 28 cents for each dollar spent by couples making $250,000 (individuals, $200,000) to help pay for health-care changes. The wealthiest taxpayers now get up to 35 cents, while people in lower income brackets get less.

The president’s proposal, the tax group says, “would mainly impact those who have benefited the most from the tax policies of former President Bush — the richest one percent of taxpayers.”

While the itemized-deduction proposal has met with a cool reception in Congress, partly because of fears it would dampen charitable giving, lawmakers are still struggling to find the money for a health-care plan and the president’s idea remains in the mix of possible revenue producers.

Citizens for Tax Justice also proposes raising money for health care by extending the Medicare payroll tax, which now applies to salaries and wages, to investment income above certain levels and applying a higher rate to the wealthiest taxpayers. It issued reports this week showing how the Medicare-tax and itemized-deduction proposals would affect taxpayers in each state.

Deborah Weinstein, executive director of the Coalition on Human Needs, a network of antipoverty groups that helped draft the statement sent to Congress, said while health care is now in the spotlight, the groups plan to wage their fight more broadly. “There are a lot of issues that are going to need revenues, especially in a bad economy,” she said.

More than 70 national groups —including the Children’s Defense Fund, Families USA, National Coalition for the Homeless, and YWCA USA — and more than 500 state and local groups signed the statement.