Yesterday, we set down a marker for the Democrats about not including abortion services in any federal health insurance option. Today, let’s applaud House Democrats for figuring out a way to finance the health care reform by taxing the super-rich.
The tax plan only hits families making more than $350,000 per annum. These super-rich folk would be assessed a federal tax surcharge on top of their regular tax bill. The surcharge would start at 1 percent of income and rise from there. For those making more than $1 million per year, the surcharge would be capped at $5.4 percent of income. The money would help our nation finally achieve universal health insurance.
Pope Benedict XVI’s encyclical Caritas in Veritate argued explicitly that financial decisions, both by individuals and by governments, must reflect sound ethical norms and promote social justice. This proposal would seem to fit that description perfectly. If you are making more than $350,000 a year, losing a bit of extra money to the tax man will not change your lifestyle. Maybe you would have to put off buying that bigger boat for a month, or doing the repairs on the Condo in the mountains, but you will still be able to afford the boat and the repairs. In turn, you will be helping the least advantaged in our society finally achieve what the Church has called a basic human right, access to good, affordable health care.
The neo-cons will rant that the proposal will stifle investment. This is an argument that only an academic can make. If you have a given amount of cash, say, one million dollars and you wish to invest it, you are going to do so in whatever enterprise you think is most likely to yield a good return. You are not going to keep it in a savings account earning 2 percent because you are afraid of the tax consequences. There is always an incentive to make money no matter what the tax consequences, unless the tax is one hundred percent. Then, you are spinning your wheels. Otherwise, whatever happens between you and the tax man, you will make investments that will earn you more income to begin with.
Some will say that this proposal amounts to a redistribution of wealth. That’s correct. And, again, this is precisely the kind of redistribution the Pope commends in his encyclical. It is not taking from some to give to others for the hell of it. It is taxing those who have grown rich through their own industry and through the opportunities for growing rich our society affords them, to give others a fundamental human right, making the entire society more just and, just so, more productive, opening even more opportunities for the investor class to make more money.
I vote for Democrats for one primary reason. They raise taxes on the rich. It remains a good reason to vote for them. Now, so long as they can keep the abortion funding out of the bill, this health care reform could become the first outstanding example of a policy that reflects Benedict’s call for a more just society.
You wrote: 'The tax plan only hits families making more than $350,000 per annum. These super-rich folk would be assessed a federal tax surcharge on top of their regular tax bill. ' (emp. mine).
What world do you live in where folks making 350K/year are 'Super-rich?' That's the problem with Liberalism, only the truly really rich can afford it. Everyone else gets screwed.
The link to health care is more tenuous. On the one hand, a program that is more generally beneficial should have a wider tax base. It would be good if the President relented on this point, although I would rather see a tax on employers which could be offset by providing insurance - a road that I think we are heading toward. On the other hand, a major objection to doing anything about health care is the growing debt and high deficit. This problem as come about largely because of tax cuts to the wealthiest. Not only restoring the Clinton era levels, but adding a surtax to make up for what was lost under the Bush era seems legitmate whether health care reform is done or not - and is necessary in order to clear the financial objections to doing health care at all. Raising the issue of abortion is a cannard - especially since most well heeled donors are in fact pro-choice. If you asked them, they would likely be in favor of funding abortions with taxpayer funds, since that means they can pay their employees less for their kids. I am in no way in favor of using general funds or general insurance funds to pay for abortions. If they are covered at all, they should be covered under Health Savings Account or Flexible Spending Accounts so the general fund is not accessed for these purposes. Ideally, any tax reform should also increase the Child Tax Credit by 600% (mostly by ending the Mortgage Interest and Property Tax deductions) so no one need have an abortion because of finances.
You're not seriously suggesting that a 1 percent increase in your taxes is going to prevent you from sending your children to high school or college, are you? Ridiculous.
Not only has there been an enormous redistribution of wealth in the last few decades, (which Reagan Catholic Republicans evidently are still fervently grateful for) but now there's the shock treatment of overnight elimination of wealth in this country of those who had not-too-much of it. A major contributing cause: abuse of the financial system by quite a lot of folks whose income largely abides in the $350000 and higher range, abuse which led directly to the reducing and eliminating the retirement investments of way too many Americans, leading this country to 10% unemployment, unprecedented foreclosures, and bankruptcy. And with last quarters' earnings up again, the big boys' and girls' earnings will also go back up again.
We can take care of our brothers and sisters in this country with responsible health care coverage - not continuing the patchwork of wasteful and entrenched patterns we've had for too long in caring for the poor and uninsured. The latter system is threatening health care for us all. Single digit tax on the wealthy seems the least harmful way to help pay for it. The wealthy will ultimately find it's an investment in our country that will add to their coffers, ultimately.
Your economic analsyis with regard to investment rates is also way too simplistic. In Econ 101 one learns that the rate at which the government begins "spinning its wheels" in terms of actual revenue generated is way below a tax rate of 100%. A tax rate of 100% would be deeply immoral anyway.
The "soak the rich stuff" is damaging in my eyes anyway because it tends to ruin the chance at building community solidarity and turn people into Ayn Rand worshippers. There is a reason that in April Atlas Shrugged was #1 on the Amazon Fiction and Literature list and even outsold the President's book for a little while. Revenge fantasy for rich people.
The most disturbing aspect of the current push for universal healthcare is the collective unwillingness to pay for it. Removing the employer tax deduction for health insurance has been shot down by Democratic senators. There's been no serious discussion of instituting sensitive and appropriate end of life protocols across the country like the one being used at the Mayo Clinic. There's been no discussion of how to rationalize the creaky regulatory and business processes that add costs throughout the healthcare delivery and reimbursement system. I hope that conservative Democrats and Republicans will band together to negotiate systemic reforms into the legislation so that universal healthcare will be sustainable.
Mr. Winters would be taken more seriously if he used normative rather than coercive arguments for funding universal care, arguments that emphasize shared burden for shared benefits. But it was ever thus: "Don't tax you, don't tax me; tax that feller that's behind the tree."
"There is always an incentive to make money no matter what the tax consequences, unless the tax is one hundred percent. Then, you are spinning your wheels. Otherwise, whatever happens between you and the tax man, you will make investments that will earn you more income to begin with."
Are you serious? Ever hear of the law of diminishing returns? I admire the candor of the post, but some of the argumentation cannot be taken seriously.
Just consider: Major Catholic universities cost roughly $30K to $50K a year (tuition plus room and board). For a couple, for example, raising three or four kids desiring that education, $350K is probably barely enough to cover the costs (not to mention the costs of Catholic grade school and high school). Is attending Fordham or Notre Dame akin to repairs on a condo or buying a bigger boat? What about a Jesuit high school? The Jesuit high school I attended is now $12,000 a year.
Should hard-working families have to forgo Catholic education?
Your funny. When the argument is a fine point of theology or philosophy, then your all for “academic “arguments on the fines turn of a phrase.
But when it comes to economics you boil it down to something as simplistic and non rational as “I vote for Democrats for one primary reason. They raise taxes on the rich. “
Not to get too academic but its pretty clear to everyone (ok perhaps everyone except my blogging fellow Irishmen and some congressmen in Washington) including the economic team at the White House that you do not have to tax a full 100% of income to discourage anyone from risking their money and investing in creating or expanding a business. It’s these investments and expansions that CREATE jobs that last beyond the next government appropriation cycle. I trust that creating lasting jobs that is everyone’s goal. ( ps - including BXVI)
What’s the right level to tax and not discourage investment ? 40% 50% 60% or more? Hard for me to say for sure but many “ academic” people will tell you that if the combined federal and state tax burden approaches or exceeds 50% or more—then the incentive to invest in our country goes away? And—despite the headlines of some wealthy class laughing at - many who are paying the higher are reporting that income because that is the result so of their business income ( Schedule C or Sub S)
The administration is already committed to having the top tax bracket rate rise to 39% - or 41% excluding various deductions in a few years. Now the proposal is for another 1% to 5% on top of that increase? So now its 42 to 47% Add state taxes in most states and your well over 50% before you add in your social security and Medicare taxes.
Some thoughts:
Real medical insurance reform that will gain the long term confidence of the country and bring real benefit to everyone must also aggressively address causes of unnecessary medical expenses—even if it nicks special interests like lawyers and pharm companies. The “cost free universal health coverage plans” that you admire would be financed only by “soaking the rich” This program would take away any incentive to improve the overall system costs from the majority of voters.
Imagine instead if the Democrats had the guts to say—we will finance universal care by raising everyone’s income tax rate 1% or 2% only if we in Washington can not find the savings we need via real tort reform, real reform of pharm , truly address end of life care, really address waste in the system . However if we are successful in controlling medical insurance expenses by making some unpopular but necessary decisions to eliminate that which generate cost but not really improve care - then everyone’s taxes only go up 0.5% or 1%. Or not at all. Now you have entire electorates who have an incentive to hold government accountable for performing. It would be daring politically but I think that would be the type of thinking that I could admire.
Giving everyone skin in the game was the wise chose of FDR when he set up Social Security. It’s missing so far from the Democratic proposals.
I do not doubt the need for a universal health care safety net. I do question the majority party’s willingness to seize the opportunity and not overreach as they did in 1992. Your article made me far less hopeful.
Liberalism will make the poor content to stay poor. Thank goodness this will never work. I never has in the past and Obama is not nearly smart enough to make it work this time. This plan is not new at all. Stop fooling yourselves hat it is. You can't be as dumb as Obama, can you? I'll bet any of you anything that the democrats lose control in the midterm elections, and the Obama (Karl Marx Jr.) won't be able to pass anything.
All of this has nothting to do with expanding health care, by the way. The poor already have free health care. Reform will make sure that they don't have to stay poor to keep it. Indeed, many of the dysfunctions of the social welfare system come from conservative demands to make sure that unemployed men aren't somehow getting family benefits.
Mr. Winters does not have a clue how the economy works. When taxes are low more aggregate revenues are produced for consumption (One man's consumption is another man's income.) The total revenues produced (GDP) INCREASE and provide a larger base income to tax. When government taxes it diverts revenues from consumption/income to government spending, thus individual consumption DECREASES total revenues decrease and you have a smaller base to tax. Consumption/Income allows the individual to make decisions (a very Catholic trait) concerning their personal lives. Government spending on the other hand has very little to do with the individual but a great deal to do with political power mongering. Government spending diverts money from the free market to the government sector and is very inefficient at best. If I had my way I would take the basic tax rates and reduce income tax rates by say 50%, (bottom rate 5% and top rate 19%) eliminate the double capital gains and dividend tax and......once an individual reaches say $ 750,000 in taxable income, the tax rate would reduce to the lowest rate (5%) on the schedule. This economy would take off like a rocket, total tax revenues would expand and we would have foreign companies moving in mass to the US rather than U.S. companies looking to leave the U.S.
I was shocked to find out that my income as a church-worker puts me in the top 25% of all income tax returns filed with the IRS for 2008.
$350,000 per year is $168.27 per hour. I do not know of any teacher, social worker, soldier, fire-fighter, police officer, etc. who makes that much money.
If people who make over $250,000.00 - $350,000.00 do not wake up soon and realize how much better off they are than the rest of the world, they will find themselves on the loosing side of a revolution.
Pay now or pay later!
Catholics in particular should be careful about free market idolatry. Capitalism has proven a wonderful engine for creating wealth, but usually needs some help in the way of distribution (See the Gilded Age or 19th Century Britain). Capitalism as a means to a just society is smething that can and should be regulated for the common good. One can argue about the degree of regulation and prefer that it be minimal, but to treat capitalism as an end in itself is wrong. The proper end should be a just society.
There is no way you can tax a country into prosperity. It has been tried and it will never work because it punishes those who are willing to produce and contribute. I am all for giving to the poor and those who truly need help, such as unmarried mothers, but the solution is not to keep taxing the so-called super rich. My father grew up very poor and through his own hard work, he is now a member of the so-called rich. He earned every penny with no living wage, and now Obama says my dad has to spread his money around according to how Obama thinks is best. This is bad economics, folks. I 100% guarantee that the Democrats will lose control of congress in 2010 and thank God for that.
In reading the article by Mr. Winters, it is disappointing to see how little he understands Catholic social doctrine. To say that the Pope commends a "redistribution of wealth" that would be achieved through brute government force is a shameful distortion, both of the encyclical and Christ's teachings.
Taxation and government welfare have very little to do with Christian charity, and much less to do with having faith and hope in the basic goodness of human beings.
Notice that 1.45% of your pay, no matter how little you earn, never makes it into your pocket, because it is taken out to pay for the Medicare costs of today's retirees. On top of that, you most likely have to contribute toward your own health insurance plan, which is not tax deductible, and which might not cover an annual exam and still requires that you pay a copay for each office visit.
If you only had to pay for your own medical expenses, would they be anywhere close to what you actually pay for insurance for yourself, the elderly members of our society, and the extra stuff that your insurance does not cover? I think not in most cases, especially not over the many years a person typically carries insurance.
The real reason that there has been no health care reform in all these years-the reason we all pay so much and don't think twice about it-is because the insurance industry has a strangle hold on our thinking and our elected representatives. Think of all the high paying paper pusher jobs that will be lost if the government comes up with a plan that really meets the needs of its citizens, and then ask yourself if you are merely subsidizing this industry with your daily labor or getting your money's worth from it.
Only a few of us are getting our money's worth, and this is because the rest of us are afraid of financial ruin if we do not contribute to the insurance pot and spread the risk around. However, in doing this, we are making it all far more expensive than it has to be. So, consider whether, if instead of contributing toward your own private health insurance, you were to have an additional 1% taken out of your pay (remember the idea is that anyone will be able to get government health insurance), it would be a good thing for you. Maybe the government would even be able to pay for that annual exam and all your children's immunizations for that price.
Regardless, right now, you are not being taxed, at all, on the federal level. Likely you are also therefore not taxed by your state government either for your health insurance premiums. You are right, your premiums are NOT tax deductible, they aren't taxed at all, which is far better than a deduction on your tax return.
Ten men go out for beer. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.
So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. He said, ''Since you are all such good customers, I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.''
The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers?
How could they divide the $20 windfall so that everyone would get his ''fair share''? They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay!
And so:
The fifth man, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33%savings). The seventh now pay $5 instead of $7 (28%savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings). The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
''I only got a dollar out of the $20,'' declared the sixth man. He pointed to the tenth man, ''but he got $10!''
''Yeah, that's right,' exclaimed the fifth man. ''I only saved a dollar, too. It's unfair that he got ten times more than I!''
''That's true!!''shouted the seventh man. ''Why should he get $10 back when I got only $2 ? The wealthy get all the breaks!''
''Wait a minute,'' yelled the first four men in unison. ''We didn't get anything at all. The system exploits the poor!'' The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important.
They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up any more. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
I find it hard to believe that you would object to paying 1% more in taxes except for the fact that I find it easy to believe that you object to working 100+ hours even though you do so for your own reasons. I doubt that in the long run you will be happy that you chose to do this instead of seeing your kids, but that is another matter.
Consider that you, no matter what, do not really have the option of not showing up "for drinks". You, whether you like it or not, are protected by our military, drive on our highways, and otherwise get to enjoy the civil rest that comes from providing for the needs of those who do not have your capabilities and opportunities.
While it might not be your preference to concern yourself with the costs of medical care in our economy, it is still the case that insurance purchasing favors those with more money over those who have less. You have more to protect and yet it costs you no more to do so than it costs someone with almost nothing.
Dear Marcia Mann,
While it is the case that my employer's contribution toward my insurance premiums is not taxed, it is also the case that the money I contribute toward insurance premiums is taxed. The proposed tax on insurance premiums would cause the employer's contribution to be considered an addition to your income even though it bypasses you.
Consider, though, the way insurance works. We all pay an amount toward our premiums. Some of us pay all of our premiums and some of us pay a smaller amount while our employers pick up the rest. There is no consideration of ability to pay. If someone works for XYZ Company and wants family coverage, he pays the same amount as everyone else working there no matter what he gets paid. If someone is self-employed, he pays whatever the insurance company charges for the type of coverage he can afford to buy and not the amount he can afford for coverage he needs.
Consider, though, that an insurance company receives $2000 a month for each family it insures. However, Mr. Richguy has a heart problem and needs a transplant. Well, my family didn't need $24,000 a year of medical attention, so what's left over from my premiums goes to help pay for Mr. Richguy's transplant even though Mr. Richguy didn't pay any more for his insurance than I did for mine, and even though Mr. Richguy could well afford to pay for everything to do with his transplant.
In other words, under the current system the less wealthy sometimes subsidize the health care of the very wealthy even though it means that they have to do without necessities. This is especially true when they become temporarily unemployed and pay the full premiums under COBRA so that they do not lose coverage for their preexisting conditions and have a waiting period for coverage when they become reemployed.
Whatever approach is taken to provide for everyone, this fact of how it is now should not be overlooked. Whether we like to think it or not, whenever a person receives health care in the US, we pay. We do not each pay for only our own, so to be fair, this necessity of life should be addressed according the communist principle of from each according to his ability and to each according to his need.