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To achieve anything that resembles meaningful health care reform, many activists are realizing, we need to focus on the grand concentrations of wealth inside the health care industry — and beyond.

By Sam Pizzigati

Later this month, in both the House and the Senate, lawmakers will likely begin "marking up" legislation that might finally give all Americans what the citizens of every other developed nation in the world already have: access to affordable health insurance.

How will lawmakers foot the bill?

"We'll pay for it," Senate Finance Committee chairman Max Baucus, a Democrat from Montana, promised last week, "in a balanced way."

What does that mean? Baucus, a key figure in the congressional health care deliberations, appears willing to "balance" the burden of financing health care on the backs of average Americans who already have health insurance.

Health insurance benefits don’t currently count as taxable income. Baucus two weeks ago included taxing health benefits on a list of "policy options" for financing reform he released with his Republican colleague, Chuck Grassley.

Also included in the Baucus funding option list: an assortment of other proposals that aim directly at the pockets of ordinary people. His committee is even considering expanding federal payroll taxes to college students in work-study programs.

Curiously missing from this "balanced" approach to bankrolling health care reform: any move to tax the individuals and corporations that have profited so lavishly from our dysfunctional health care status quo.

This week the pushback — against the Baucus "balance" blinkers — begins. A coalition of health care reform-minded labor, religious, and community groups will be meeting this Wednesday in Washington to lay the groundwork for a tax-the-rich offensive.

Congress could take a giant step toward funding health care reform, notes the new Citizens for Tax Justice analysis undergirding the offensive, by "eliminating or reducing several subsidies and preferences provided in the federal tax code to the wealthiest and most powerful among us."

This Citizens for Tax Justice "revenue options" paper aims to restore the "balance" so egregiously missing in the Senate Finance Committee options list.

Average Americans, the paper points out, have just provided "Wall Street (and thus the richest people in America) the biggest taxpayer-funded bailout in history." Congress, the analysis continues, now ought to cut a deal. Main Street, after all, "is paying to make Wall Street healthy." Wall Street, to help finance health care for all, should "return the favor."

Citizens for Tax Justice is proposing a host of tax-the-rich ideas various lawmakers have advanced over recent years: ending preferential accounting treatment for executive stock options, closing offshore tax loopholes, repealing tax breaks for hedge fund managers. But the group is also advancing some proposals that haven’t received much attention in the past.

The most potentially lucrative of these: Subject the rich to the Medicare tax.

This Medicare tax currently only applies to payroll income. If you work for wages or salary, you pay this Medicare levy. If you get your income from investments, you don’t.

One Citizens for Tax Justice proposal to end this inequity would apply the 1.45 percent Medicare tax that currently applies only to paychecks to all income. Another would tax paycheck income over $250,000 on joint returns to a higher than 1.45 percent tax rate.

Still another option — that Citizens for Tax Justice gives a special spotlight — would combine these two approaches but exempt senior citizen couples from paying any additional Medicare tax on their first $100,000 of income.

This combined proposal would raise $44.7 billion in 2012, a major chunk of the $106.8 billion the total Citizens for Tax Justice package would collect — without taking any appreciable dollars out of the pockets of families in the bottom 90 percent of the U.S. income distribution.

In fact, of the $106.8 billion the Citizens for Tax Justice plan would raise, 91.8 percent would come from households in the top 10 percent, with 78.4 percent from the top 1 percent alone.

The Citizen for Tax Justice proposals, in total, would bring in more than $1 trillion over a decade — and simply the tax code to boot. Will that be enough to get the attention of Senator Baucus and his colleagues? Only if the rest of us insist.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality.

Originally posted to Sam Pizzigati on Tue Jun 02, 2009 at 08:46 AM PDT.

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Comment Preferences

  •  Currently missign from Baucus book balancing (3+ / 0-)
    Recommended by:
    FightTheFuture, Nospinicus, ludlow

    Single Payer - with which much of the money needed to get everyone on board with insurance, some $400+ Billion would be available.

    But, Max wants to go madly, hand-in-hand with the private insurers instead. He may not even have public option, except as a fall-back position, should private insurance once again fail to live up to the task.

  •  Fighting two fights or one? (0+ / 0-)

    I think that trying to bring single payer to the table, or even a good universal coverage plan, is made more difficult if you try and make the program to pay for it more progressive. Currently our Medicare tax is a flat tax and everyone pays it on their wages and salary. Trying to expand the Medicare tax to investment income is a battle that would be fierce.  By also trying to expand affordable health care to more Americans, but seeming unwilling to have everyone participate in the funding makes us seem less committed to the cause.

    "let's talk about that"

    by VClib on Tue Jun 02, 2009 at 09:55:10 AM PDT

  •  Here's the problem with the Medicare tax increase (3+ / 0-)
    Recommended by:
    jimreyn, DBunn, JerichoJ8

    It doesn't hit the truly rich, because it only hits labor income.

    So a nurse who regularly works overtime in California will pay more taxes, but the millionaire financier who makes all his money in capital gains and dividends won't pay an extra penny.

    Right now the tax on working, including state taxes in California is more than 50% on upper middle class people in California, but as low as 15% of millionaire hedge fund people.

    •  Dividends, cap gains, proceeds from sale (1+ / 0-)
      Recommended by:
      jimreyn

      of stocks, bonds, securities all need to be taxed at the regular income tax bracket rate. Oh, and inheritances, too.

      Rather than have 6 tax brackets, we need to go back to 24 or more brackets, with the rate progressively going up.

      In CA, I understand the top tax bracket on personal income is 10.3 and starts at $47K/yr? Correct me if I am wrong, but that needs to change, too. People in the lower middle class should not be paying at the rate as millionaires and billionaires.

      •  Not exactly (0+ / 0-)

        I am too lazy to look this up, but I'm close. The top rate of 10.3% is for incomes over $1.0 million. The beef is that the next lowest rate which is about 9.6% goes from about $50K - $1.0 million. The problem is that the state of CA relies too much on high income earners. The top 5% have incomes that vary wildly, really high in good times and much lower in down cycles. Making the top rate higher (its already in the top 2 or 3 in the US) encourages those people to move their primary residence to Nevada, or Florida and pay no state income tax.  They can still keep and enjoy their property in California but can only live here part time.

        "let's talk about that"

        by VClib on Tue Jun 02, 2009 at 11:02:20 AM PDT

        [ Parent ]

  •  How about just increasing the number of (3+ / 0-)
    Recommended by:
    jimreyn, FightTheFuture, JerichoJ8

    tax brackets and stepping up the tax rate on personal income, for starters?

  •  Baucus says this according to AP (4+ / 0-)

    Baucus said the tax-free benefit packages Americans now enjoy are a big factor in the high costs of the country's health care system, because they provide workers free or low-cost access to too many health care services.

    •  Totally fucking shameful (2+ / 0-)
      Recommended by:
      jimreyn, FightTheFuture

      This from the man who sent a flunky out last week to meetings in MT - with a video message proclaiming his need to hear from the voters, the people who are his "employers"
      Baucus Aide told of Need for Single-Payer at meetings Baucus wouldn't attend during the Senate's out of session period.

      "You're my employers. You're my bosses. You're the people I work for. I'm just the hired hand. I want to hear what you want to see in any legislation we pass in Washington, D.C."

      So he (does not) listen, hears about single-payer second-hand, then turns around and dumps on the poor and elderly?

      Totally fucking shameful.

    •  Regressive aspects of employer ins (1+ / 0-)
      Recommended by:
      JerichoJ8

      Employer-supplied health insurance, a benefit that is not counted as taxable income, is regressive in several ways.

      1. Many low-wage and nearly all part-time workers do not receive this employer benefit. If they purchase health insurance on their own, they receive no equivalent subsidy.
      1. Highly paid employees get a bigger tax break. If the benefit were taxable, it would be added to the top of their income, so to speak, and subject to higher marginal tax rates.
      1. Highly paid employees sometimes have more generous health benefit packages, further increasing the disparate tax break.

      :::

      It's a bit disappointing to hear Sen. Baucus blaming high health care costs on people seeking care. I thought that was the point of having a health care system. Better he should go after the systemic incentives for insurers, providers, and suppliers to increase revenues.

      •  It's not regressive. It's just selective as a (0+ / 0-)

        benefit of employment.  Employers use this as a carrot to attract and retain talent.  It's part of the deal and pursuing this is just plain dumb as it leads to parsing differences in various workplaces to ridiculous extremes at the determent of employees everywhere.    

        Some companies offer more vacation than others, some have better campuses, better offices, equipment, working conditions, ergonomic chars, better k401 contributions, pensions, etc.... do you want to parse that out and try to tax it also?  That's just a road to lowest common denominator and loosing gains made in the workplace.

        What's regressive is the lack of health care for everyone, regardless of employment.  single payer where everyone is in it is the only way to go.  even with that, insurance may be available for certain services or faster attention to elective or non-critical procedures, as it is in other countries.  

        So, point 1 is irrelevant.  

        Point 2 is confusing, how do higher paid employees get a bigger benefit?  Health care costs is a fixed expense so how do they get a bigger benefit?  Are you saying a person is pushed up a bracket?  Unlikely with our current rather flat tax brackets.

        Point 3 is not exactly true.  All employees of a firm are subject to the same health care coverage options within an area (state or country); it's some law, as I recall, that companies have to be non-discriminatory on this.  Executives can get more perks, but that's because they are executives, contract employees with their own terms, and not W2.  


        We the People in order to establish Justice, Defense, Welfare, Liberty do establish the US of A. That is what America is about!

        by FightTheFuture on Tue Jun 02, 2009 at 12:22:07 PM PDT

        [ Parent ]

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