These officials said one of the options Reid has had under review would raise the payroll tax that goes to Medicare, but only on income above $250,000 a year. Current law sets the tax at 1.45 percent of income, an amount matched by employers.
While not identical to the House's proposal to put a new surtax on the earnings of millionaires, it is very similar. Both would tax the income of the very wealthy. This is a rare instance when Reid may end up doing a slightly better job framing the debate. A change to the Medicare payroll tax for the super-rich might sound less exotic.
The other important thing is that this tax change would be “health care money.” Many Senate conservatives have been demanding reform only be paid for with money “inside the health care system.” This move might stretch the limits of this weird standard, but if this framing allows it to pass through the Senate, that is all that matters. If Reid can get the Senate bill to more heavily rely on taxing the wealthy, and less on taxing employer-provided health insurance benefits, it could reduce the number of contentious issues needed to be settled in conference.