Health knowledge made personal
Join this community!
› Share page:
Search posts:

Health care plan hits rich with big tax increases

Posted Nov 03 2009 10:02pm

If health reform is to be meaningful then all must contribute.  Currently, the bottom 75% of those filing tax returns pay only about 3% of all federal income tax.  That does not figure in the tens of millions who do not file returns under current tax law.  The Democratic bill in the House aims to transfer almost $500 billion dollars of personal wealth over the next 10 years to subsidize health insurance for some 35 million + Americans, and in the end, despite protests to the contrary, quite possibly another 12-20 million illegal aliens.  The proposed 5.4% “surtax” will be on top of the 39.6% rate increase on marginal income to become effective in 2011.  This will bring the top marginal rates to 45% at the federal level, before taking into account state income taxes, local income taxes, sales taxes, property taxes, capital gains taxes and other incidental taxes and fees.  The House bill, at nearly 2,000 pages, is a bureaucrats wish list come true.  It involves, fees, committees, panels, reviews, and more red tape than we have seen in many years.

Health reform does not require this amount of federal taxation.  Congress has been for too long simply unwilling to regulate health insurers in a meaningful way.  Some believe this is because Congress is heavily “in bed” with the insurance industry via lobbying as well as political contributions.  All in all, this is a bad bill.  The House likely cannot do better, given their ideological viewpoint.  The most simple reforms seem unable to be addressed in a straightforward manner. Such as removal of all pre-existing condition exclusions.  Maybe Congress could try that one in a one page bill.  And then vote on that one up or down.  Is that too hard? . . . obi jo

Who Pays Income Taxes?  –

The typical family would be spared higher taxes from the House Democratic plan to overhaul health care, and their low-income neighbors could come out ahead. Their wealthy counterparts, however, face big tax increases that could eventually hit future generations of taxpayers who are less wealthy. The bill is funded largely from a 5.4 % tax on individuals making more than $500,000 a year and couples making more than $1 million, starting in 2011. The tax increase would hit only 0.3 % of tax filers, raising $460.5 billion over the next 10 years, according to congressional estimates. But unlike other income tax rates, the new tax would not be indexed for inflation. As incomes rise over time because of inflation, more families — and more small business owners — would be hit by the tax.

These are very big numbers and very high effective tax rates. The new health care tax would come on top of other tax increases for the wealthy proposed by Obama. The top marginal income tax rate now is 35%, on income above $372,950. Obama wants to boost the top rate to 39.6% in 2011 by allowing some of the tax cuts enacted under former President George W. Bush to expire. House Democrats said they are proud that they found a way to finance the health care package largely from a tax on the wealthy. There is, however, little appetite for a millionaire’s tax in the Senate, and some tax experts think it is a mistake to tap only rich people to pay for services used by all. “If health care is a benefit that is worth having, then it’s worth paying for,” said William Gale, who was an adviser to President George H. W. Bush’s Council of Economic Advisers and is now co-director of the Tax Policy Center. “This gives the impression that it’s only worth having if someone else pays for it.”

Under the bill, individuals are required to obtain health insurance coverage or pay penalties, which are described as taxes in the legislation. The penalty would be equal to the cost of an average insurance plan or a 2.5% tax on incomes above the standard threshold for filing a tax return, whichever is less. There would be waivers for financial hardships. To help afford insurance, families with incomes up to four times the federal poverty level would qualify for subsidies. The poverty level for a family of four is $22,050 this year. Republicans argue that the penalties violate Obama’s tax pledge, and they liken the millionaire’s tax to the Alternative Minimum Tax, which Congress enacted in 1969 to ensure that wealthy Americans cannot use loopholes to avoid paying any income taxes. The AMT was never indexed for inflation, so Congress must enact a fix each year to spare about 25 million middle-income families from being hit with big tax increases.

Health care plan hits rich with big tax increases -

More and more, the Great Health Care Debate of 2009 is a numbers game. And the longer the debate goes on, the squishier the numbers seem to get. For months, many leading Democrats, including President Obama, have pushed for the creation of a government-run insurance plan to compete with private insurers. A main argument was that a public plan would save people money. It would not be under pressure to earn profits, pay high private-sector salaries or deny needed care. But after House Democratic leaders unveiled their health care bill on Thursday, the Congressional Budget Office said the public plan would cost more than private plans and only six million people would sign up. One reason the public plan would not save customers money is that it would have to negotiate payment rates with doctors and hospitals just like private plans.

To Bend the Health Care Debate, Curve the Numbers –

Posted in health insurance, health reform, politics, Public Health, Tax Policy Tagged: Alternative Minimum Tax, AMT, Democrats, health, health care, health care reform, health insurance, health insurance access, health Insurance exclusions, health insurance reform, health news, health plans, health policy, health reform, healthcare, House of Representatives, indexing, inlfation, Insurance, insurance access, Insurance Profits, mandated health coverage, Medicaid, medical news, Medicare, medicine news, Nancy Pelosi, news, patient care, patients, personal health mandates, personal health responsibility, Physicians, politics, pre existing conditions, President, President of the United States, rich, selective taxation, Senate, Tax Policy, taxes, underinsured, uninsured, wealthy, who pays taxes
Post a comment
Write a comment: