And since we’re talking about health care…
This isn’t really part of the conversation anymore, especially now that Congress and the president have taken it off the table, but it’s worth reminding folks that we could cover a good chunk of the cost of health care reform by simply raising taxes on the highest earners.
The House proposal for an income surtax – targeted at households with incomes in excess of $350,000 – would have raised $544 billion over ten years, or almost two-thirds the cost of President Obama’s plan for health care reform. What’s more, it’s not as if this would have be particularly unfair. As the Center on Budget and Policy Priorities recently noted, the top one percent of income earners captured more than 60 percent of the nation’s income gains between 2002 and 2007.
Seeing as how it’s very unlikely that the top 1 percent were the sole drivers of national income gains from 2002 to 2007, raising taxes on those earners to pay for expanded public services seems like a perfectly reasonable idea, as far as public policy goes.
LOL — you mean the imaginary income that disappeared in 2008 and 2009? I’m sure the top 1% wouldn’t wouldn’t mind those gains being taxed.Report
You might also ask how much of the increase in taxes collected by the government came from the top 1% in that same time period. Based on the information I found at the Tax Foundation, it appears that between 2002 and 2007 the amount of federal income taxes attributable to the top 1% increased from 33.7% to 40.4%. I’m guessing that these folks do not feel undertaxed. Also further increasing dependency on higher earners for tax revenue is likely to increase volatility in the income stream as well as incentives for tax avoidance.Report
I’m guessing that these folks do not feel undertaxed.
The top 1% in America is not tax-sensitive, as we might gather from its support for Congressional Democrats and Obama in recent elections.Report
Eh, this is a place I mostly divert from the liberal orthodoxy. Income taxes don’t have much of a rational relationship to health care provision. Not to mention that incomes don’t grow as fast as health care costs, so even if this works for 10 years ,what does it look like in 20?
Don’t get me wrong: taxes should be quite a bit higher (on everyone, not just the richest), but making the argument using health care doesn’t really persuade me.Report
Income taxes have everything to do with the health care legislation if you care the cost of the proposed bill.Report
Not really. There are lots of ways to pay for things. I would prefer to tax the benefits directly, because that bears a direct relationship to costs, but that’s not the option we’ll choose. Still, income taxes are a blunt instrument that makes almost no sense.Report
Taxes could certainly be higher – Clinton-years-high to be sure. But the question is how to contain costs, not merely how to pay for the initial tab. Without some way to actually, effectively contain public spending on this and Medicare/Medicaid we are looking at taxation levels that will begin to hurt the economy in the long run. That’s unacceptable. But yes – by all means, raise taxes on the rich (and on the middle and lower tax that will benefit from these reforms) but also find better ways to keep costs in line. HSA’s perhaps (the Singapore/DeLong model).Report
Or, horror of horrors, tax the benefits directly.Report
This is where the unions start clearing their throats. I work at a pretty good job with pretty good health care benefits. A co-worker (one who has chronic friggin’ everything) told me that he’s not on our health care plan but on his wife’s. “Your wife works at a place that has a better plan than here?”, I asked incredulously. “She works at (national grocery chain).”
Now, (national grocery chain) doesn’t pay exorbitantly well, but they do provide an amazing health care plan. Taxing that benefit would decimate (at least!) their paychecks.
Which, of course, is not to say that I don’t agree with you in principle.Report
I suspect National Grocery Chain ™ pays less well specifically because of their amazing health care plan. I’m actually not sure what the state of incidence analysis re: the employer benefits tax shelter looks like, so maybe it would work out poorly for their employees. But that’s what subsidies are for, I guess.Report
The whole “tax it and then subsidize them” thing gives me hives.Report
I know that about you.Report