As part of the continuing discussions about health care reform, the spectre of how to pay for it has risen again. Yeah, cause that’s how it apparently works in Congress. Much like college students, the plan is to figure out how to pay for all the binge-spending “later.”
So, with that in mind, consider this: Senate Majority Leader Harry Reid (D-NV) is seeking yet another source of funding for health care reform. This one would raise Medicare payroll taxes on couples who make more than $250,000 a year. Yep, these are the same folks that are likely getting hit with an increase in regular ol’ income taxes to pay for health care reform.
Reportedly, the increase would make up for concessions being made with respect to those Cadillac plans. If you believe the chatter, those thresholds may increase – to $8,500 for individuals and $23,000 for couples. The resulting gap will be narrowed by those increased Medicare payroll taxes.
The proposal isn’t much in terms of dollars. It would simply raise the payroll tax to 1.75% from 1.45% for individuals earning more than $200,000 a year and couples making more than $250,000. Popular for the middle class, sure, and for unions who have opposed the Cadillac tax plans.
But not so popular with high dollar wage earners who feel as though they’re being looked at to pay for, well, everything. Need a dollar? Jack up taxes on the wealthy. It’s just so easy.
But maybe – and I’m just throwing it out there – there’s not an endless pool of money out there. Maybe exerting pressure at every turn on high wage earners to make up the difference could have unintended consequences. John Goodman (not the actor who plays Roseanne’s husband but President of National Center for Policy Analysis) claims that the extra Medicare tax “takes money out of the system needed to create jobs.”
That’s not something to be taken lightly in this economy. And the GOP knows it. All of the Republicans in the Senate are opposed to the bill. To push it through and put the kibosh on Sen. Joseph Lieberman (I-CT), Sen. Reid needs the okay from everyone else. Everyone. I’m not sure he’ll get it. Just doing a little bit of math here… But Lieberman kind of counts as one of those “everyone else”, right?
I just received a notice last week from my health insurance provider that rates at my office would be increasing an average of more than 25%. It’s not unexpected. Apparently, health insurance is one of the few industries which can regularly raise their prices by double digits each year without retribution.
But what is unexpected is that the increase is creeping us slowly towards what the Senate Finance Bill is calling a Cadillac plan. My bare bones little plan (no dental, no vision) now costs about $5,000 per year for individuals and $15,000 for families. And I happen to have one of the latter.
The Senate Finance Committee had proposed a 40% tax on the portion of insurance which exceeds $8,000 per year for individuals and $21,000 per year for families. If we get similar increases in our health care plans for the next two years, I’ll be extremely close to being at risk. God forbid we add dental (and I have three kids with crooked-y teethed parents so there’s no dispute that this will likely be a necessity at this point). Who knew that I had a Cadillac plan?
Notwithstanding public options and other controversial parts of the health care reform bill, the real issue that remains of concern to many is how the plan is going to be paid for… In addition to the 40% tax on those Cadillac plans proposed by the Senate, the bill as recently passed by the House would impose a 5.4% income tax on individuals making more than $500,000 and joint filers making more than $1 million. If existing tax cuts expire in 2011, which appears increasingly likely, the top income tax rate would grow to 45% – a 10% increase.
But here’s a thought. In an increasingly dim economy, isn’t it a little scary to rely on higher taxes from top wage earners to foot the bill?
The proposed excise tax on “Cadillac” health care plans is raising a lot of controversy. Opponents, like Health Care for America Now (HCAN), believe that it might affect middle class Americans and instead, urge increasing the income tax on families making more than $250,000 per year. They’re touting their plan with ads like this one:
The commercial is paid for by HCAN, which is a section 501(c)(4) issue advocacy organization. The organization describes itself as “a national grassroots campaign of more than 1,000 organizations in 46 states representing 30 million people dedicated to winning quality, affordable health care we all can count on in 2009.”
I have seen a lot of articles in the paper about taxing sodas and foods that are bad for you. I say, “Why not?”
I used to be a smoker. At one point, I was up to two packs a day. When New Jersey raised their cigarette tax, I stopped because my cigarettes were almost twice as expensive as when I had started smoking. I couldn’t afford it anymore. You know what? It was the right choice. I am healthier today because I stopped smoking. And I might not have done it if cigarettes were the same price as before.
I think this idea of taxing unhealthy behavior is a smart one. I think we should tax things that make us sick: cigarettes, alcohol, fatty foods and sugary foods. I know that people don’t like the idea of the government telling them that they shouldn’t do things like eat foods that are bad for you but all of these things are adding to our health care problem. I don’t think it’s fair that I should have to pay for health care for people who didn’t stop smoking or who eat too much. And I have read that most of the cost of health care in the US is to pay for diseases and sicknesses that could have been prevented with a better lifestyle.
I’m not saying that you shouldn’t be able to buy cigarettes, beer and candy but I do think if you do continue to buy those things, you should pay more. Maybe some people will stop because of the cost. And those that don’t will pay for their own health care. If this happens, maybe we won’t have to raise income taxes to pay for health care.
Despite President Obama’s plan to push through a massive health care reform bill before the August break, it will not happen.
Sen. Harry Reid (D-NV) said about the bill, “I think that it’s better to have a product that is one that’s based on quality and thoughtfulness rather than trying to jam something through.” Sen. [...]
House Democrats think they have a plan to pay for health care reform. And yes, it’s going to cost… somebody.
The 1000+ page health care plan as proposed by President Obama comes with a hefty price tag. Congress has been charged with coming up with the funds for the plan. That isn’t proving [...]
Don’t call it the Obama health care tax.
On Sunday, Health and Human Services Secretary Kathleen Sebelius clarified on CNN’s State of the Union that the proposal being considered in Congress to tax employer provided health care benefits was not endorsed by her boss. Obama had opposed such a tax during his candidacy; his [...]
In an effort to fund their massive health care plan, members of Congress are scrambling to find revenue. After searching under their car seats and sofa cushions for extra change, they have basically admitted that the well is simply dry.
And that proposal to tax employer provided health care benefits? It’s just not [...]
Ever since President Obama raised the idea of taxing health care benefits, I’ve been asked what I think about the plan. Specifically, I’ve received a number of emails which more or less ask three questions:
How would it work?
Do I think it’s fair?
Do I like it?
I’m happy to oblige. But first, some history.
This idea [...]
Senator Max Baucus (D-MT) isn’t a fan of limiting the itemized deductions for higher wage earners. I’ve said before that I’m not a fan of the idea and I don’t think it will pass in Congress.
But Baucus has another idea. He’s asked Treasury Secretary Geithner whether the Obama administration would consider changing the [...]
