Republicans trained their fire on Democrats’ plan to finance the bill by making it harder for owners of smaller, privately owned companies called S corporations to avoid paying Social Security and Medicare payroll taxes on some of their income.
The proposal would apply to such companies with incomes exceeding $250,000 and whose revenues come mostly from the work of three or fewer owners. The higher payroll taxes would also be required for some law firms, doctors’ practices and other professional services partnerships…
Senate Democratic aides said their bill would pay for itself with around $6 billion in extra Medicare taxes that would be collected over the next decade from the private companies.
That money would normally go to a Medicare trust fund for financing the hospital care the program provides its elderly recipients. Democrats said their payroll tax language would also raise $3 billion in new Social Security revenue, but that money would go to Social Security’s trust fund and not be used to pay for the student loan legislation.