Rethinking Medicare's Payroll Tax After Health Care Reform

6 Pages Posted: 12 Aug 2011 Last revised: 20 Oct 2011

Richard L. Kaplan

University of Illinois College of Law

Date Written: August 1, 2011

Abstract

This Article addresses the significant changes to the Medicare tax that were enacted in the 2010 health care reform legislation. Effective in 2013, these changes apply to anyone, retired or not, whose adjusted gross income exceeds $200,000 (or $250,000 for a married couple filing jointly) and apply to investment receipts as well as salary and self-employment income. The Article briefly explains how Medicare is financed currently and then focuses on the new changes, analyzing their impact on two-income married couples, the interaction of the increased tax on salaries with the new tax on investment income, and the effect of mandatory pension plan distributions. The Article then considers whether in light of these new changes, there is any continuing rationale for dedicated taxes that fund the Medicare program.

Suggested Citation

Kaplan, Richard L., Rethinking Medicare's Payroll Tax After Health Care Reform (August 1, 2011). Taxes - The Tax Magazine, pp. 55-59, August 2011; Illinois Program in Law, Behavior and Social Science Paper No. LBSS11-29; Illinois Public Law Research Paper No. 11-02. Available at SSRN: https://ssrn.com/abstract=1907743

Richard L. Kaplan (Contact Author)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
(217) 333-2499 (Phone)
(217) 244-1478 (Fax)

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