By Tom Curry National affairs writer
msnbc.com
updated 9/25/2009 11:03:37 AM ET 2009-09-25T15:03:37

Claim: The Senate Finance Committee bill would raise taxes on those who deduct medical expenses on their tax returns.

If you itemize on your tax return, you can deduct the amount by which your annual medical care expenses exceeds 7.5 percent of your adjusted gross income. In 2007, nearly 11 million taxpayers — most of them with incomes under $75,000 — took deductions for medical expenses. This tax break costs the Treasury about nearly $9 billion a year and is a potential source of the money needed to pay for providing health insurance to the uninsured. But if the tax break were curtailed, some people with extraordinarily high medical costs would be forced to pay higher taxes in order to help subsidize other needy people.

Fact or fiction?
Fact. Senate Finance Committee Chairman Max Baucus, D-Mont., proposes to change the tax law, starting in 2013, so that people could deduct medical expenses only if they exceeded 10 percent of adjusted gross income. This would raise income taxes by nearly $22 billion between 2013 and 2019. An analysis by the non-partisan Joint Committee on Taxation found more than half the impact of this tax increase would be on people age 65 or older. Taxpayers under $75,000 would bear about half the cost of the tax hike. But Baucus said Tuesday his proposed tax increase "was something that was, frankly, put together pretty quickly to satisfy other [revenue] needs," and said that he was open to finding ways to soften its impact on senior citizens.

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