Connolly Opposes Tax On High Incomes
Connolly: U.S. should pursue more savings in health care costs before turning to additional taxes.

By Julia O'Donoghue
Connection Newspapers
July 24, 2009

U.S. Rep. Gerry Connolly (D-11) organized other freshman Democrats to oppose a component of his political party’s health care proposal that would have raised taxes on individuals earning $280,000 or more per year and households earning $350,000 or more per year, even though these households are among the wealthiest one percent in the country.

"Why are we talking about new taxes at all? We spend twice as much on health care as any other industrialized nation already," said Connolly, who thinks there are more ways to wring cost savings out of the current health care system.

The congressman said the pharmaceutical companies have put $85 billion worth of savings on the table for health care reform and the hospitals have offered up $130 billion for the same cause. But the insurance industry has not offered up any cost savings so far, even though profits for the country’s top 10 insurance companies have increased by 428 percent over the last decade, he said.

"The insurance companies have not put a dime on the table. …We should be looking at new taxes as a last resort. We need to look at savings first before we consider revenue enhancement," said Connolly.

Still, an older version of the Democratic Party’s health care reform plan called for a surtax that increases from one percent for those making between $350,000 to $500,000 to over five percent for people earning more than $1 million.

After the objections of Connolly and some other Democrats, House speaker Nancy Pelosi has proposed bumping up the tax threshold to individuals earning $500,000 and families earning $1 million.

Though Connolly would like to avoid a new tax altogether, he said Pelosi’s new proposal is more palatable than what was originally proposed.

It would have less of an impact on small business owners, who sometimes have to report their company’s earning as personal income, he said.

With a household cut off of $350,000, the original tax plan would have affected some of Connolly’s constituents, since the congressman represents one of the most affluent congressional districts in the nation. Connolly said that about 14 percent of households he represents earn more than $200,000 annually.

The bulk of Connolly’s district is in Fairfax County, where the median annual household income was $102,460 in 2007. In that same year, the nation’s median household income was about $50,007, according to the U.S. Census.

Even if they are among the wealthiest households in the country, Connolly said his constituents should not be considered in the same way as Hollywood movie moguls or investors on Wall Street.

"These people have not inherited their wealth. … We are not talking about Rockefellers," he said.

The median household income in Northern Virginia is higher because both adults in a household are more likely to work full time as professionals than in other parts of the country, said Connolly.

A couple where both members held high-ranking civil servant jobs in the federal government could make close to $350,000 per year, he said.

Connolly is also worried about the piling-on effect of President Barack Obama’s tax policy on those in the upper income brackets.

The president already intends to let George W. Bush’s tax cuts for those who make over $250,000 annually expire in 2011. This means that wealthier people will automatically see a tax increase, regardless of whether the health care surcharge is added or not.

"If all we were talking about is this surcharge, it would be a different situation. You have to look at it in context," said Connolly.

U.S. Rep. Frank Wolf (R-10), who represents northern and western Fairfax, is opposed to several aspects of the health care proposal, including the suggestion of a tax increase, said Dan Scandling, Wolf’s chief of staff.

U.S. Rep. Jim Moran (D-8), who represents Fairfax, Arlington and Alexandria, shares some of Connolly’s concerns about the tax burden, said Austin Durrer, Moran’s communications director.

http://www.connectionnewspapers.com/article.asp?article=331162&paper=81&cat=104