Democrats agree to raise taxes and cut Medicare to fund health care reform

AP Photo/Ron Edmonds

House Democrats agreed Friday to raise taxes by about $550 billion to pay for their sweeping expansion of the nation's health care system.

The huge tax increase will only pay for about half the cost of the Democrats' health spending plans, so according to the New York Times, the Democrats will also cut Medicare spending, the government health plan for the elderly, and other health care savings to pay for the rest of the $trillion-plus health care spending spree.

The top federal tax rate is now 35 percent, but Democrats have vowed to raise it to 39.6 percent next year. The Washington Post quotes Robert Carroll, a senior fellow at the nonprofit Tax Foundation, as saying that combined with other federal tax adjustments, the Democrats' new health care spending tax increase could leave some taxpayers facing top federal rates of at least 45 percent.

The Democrats' new health care spending tax increase agreement enables House Democrat leaders to unveil health legislation Monday and bring it to a vote before the Congress takes an August vacation.