Biden calls for tax on the wealthy to extend Medicare funding

President Joe Biden delivers remarks on his plan to protect Americans access to affordable health care in Virginia Beach, Virginia, on Feb. 28, 2023.

Saul Loeb | AFP | Getty Images

President Joe Biden this week called for higher taxes on wealthy Americans to boost Medicare as part of his 2024 budget, aiming to help fund the program for at least 25 years.

The plan would increase the net investment income tax from 3.8% to 5% for earnings of more than $400,000, including regular income, capital gains and so-called pass-through business income, which flows to individual tax returns, according to the White House.

Enacted through the Affordable Care Act, the net investment income tax currently applies to earnings above $200,000 for single filers and $250,000 for married couples filing together.

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“Since Medicare was passed, income and wealth inequality in the United States have increased dramatically,” the White House said in a fact sheet. “By asking those with the highest incomes to contribute modestly more, we can keep the Medicare program strong for decades to come.”

The plan also aims to expand Medicare’s ability to negotiate prescription drug prices beyond the measures enacted through the Inflation Reduction Act.

Biden’s plan, however, is unlikely to pass in the Republican-controlled House of Representatives.

The full budget will be released Thursday.

The future of Medicare and Social Security

Biden's budget plans to fund Medicare with tax hike targeting those making more than $400K
Source: CNBC