U.S. Senate Democrats are finalizing a plan to close a tax loophole used by many companies, and they want to use those revenues to shore up the government-run Medicare healthcare program for the elderly and disabled, sources familiar with the discussions said on Thursday, Reuters reported. Democrats expect to submit legislative text to the Senate parliamentarian in coming days, said one source, who asked not to be identified in order to discuss the private negotiations. The tax change is aimed at the majority of businesses in the United States that are known as "pass-through" firms that are not subject to the corporate income tax and instead have their income reported to the government on individual tax returns, subjecting them to the lower tax rates. Under the proposed changes, individuals who make more than $400,000 annually and couples who make more than $500,000 would have to pay a 3.8% tax on earnings from their pass-through business income. The fund that finances Medicare is currently set to be depleted by 2028. Democrats expect their pass-through tax proposal will amass $200 billion and would help make the trust fund solvent until 2031.
