Americans currently pay no income taxes on the premiums paid for employer-provided insurance. After repeatedly attacking McCain for his plan to repeal this exclusion, the Obama administration is considering similar measures. A tax on health benefits would fall hardest on older, sicker Americans with higher premiums. Ironically, this is the group already most hurt by the skyrocketing costs of medicine.

 

The House Ways and Means Committee has proposed a 3% payroll tax on employers’ health care expenditures. This tax is similar to a repeal of the employee health benefits tax exclusion – it would fall hardest on the old and sick – but lacks its saving grace: it leaves the individual and employer markets on un-equal playing fields.

 

The Senate Finance Committee has proposed taxes on alcohol or sugary drinks. These “sin taxes” fall disproportionally on lower-income Americans. They are not expected to be a sufficient source of funds on their own, and similar taxes commonly fail to raise predicted amounts of money – in part because consumers stop consuming the taxed product. A sin tax now means another tax later.

 

Obama originally suggested paying for health care by reducing the deduction that wealthy individuals receive for some itemized deductions, including charitable giving. Currently, the wealthy receive a deduction equal to the amount of income tax that would have been paid on their gift. Decreasing the deduction amounts to taxing charity. This sort of tax would disincentivize charity and would harm the rich and poor alike.

 

Rep. Pete Stark predicts that Congress will need to pass an income tax surcharge. Increasing the income tax decreases real wages and discourages employment. Reduced unemployment leads to lower GDP and a higher cost of doing business.

 

In the opening weeks of his administration, Obama called for a repeal of overseas corporate tax deferrals. High US corporate tax rates already put American companies at a disadvantage. Repealing the deferral would prohibit American companies from reinvesting their profits at the same cost as their foreign competitors – making these firms less competitive and less profitable.

Several members of the Obama administration have nervously mentioned a VAT. A VAT taxes the value added to a good at each stage of production. The costs of taxation are passed down the line of production to the consumer. Higher consumer prices mean a lower standard of living, and because low-income individuals consume a larger portion of their income, they end up paying a disproportionately large portion of the tax. Because VAT costs are hidden from consumers, politicians pay little price for inflating them from initially low rates.

The list goes on. In February the Senate Finance Committee proposed a jumble of tax increases to pay for new health care programs. The measures include a repeal of the itemized deduction for medical expenses and new restrictions on health savings accounts (HSAs), flexible spending arrangements (FSAs), and health reimbursement arrangements (HRAs). These tax increases are especially cynical: they would not raise enough money to pay for any significant health reform. Instead they are intended to entrench the tax advantages of employer-provided health plans and stamp out the already-burdened individual insurance market.

On top of cap and trade, this makes it more than just absurd for Obama to continue claiming not to break his tax promise -- it defies logic. Obama is constantly saying there are 48 million uninsured who deserve healthcare. On a proposal that would radically change our country and our lives however, he doesn't think Americans deserve details or the full truth. The full truth is that 14 of 48 million already qualify for an existing program that YOU pay for, but haven't signed up. Obama says they need a mandates, someone to do it for them, etc., & YOU're going to pay for it. Obama thinks Americans are incapable of making rational decisions about their lives & apparently the competence of a healthcare bill.
>> Harold Armstrong: MA Thursday, July 2, 2009 12:47 PM

ATR should change its name to "Ungrateful Rich People Who Don't Want To Pay Their Fair Share To The Society That Enables Their Orderly Accumulation Of Capital". Quit whining.
>> Hilary Friday, July 3, 2009 4:14 AM

Hilary, Quit it with your "What's yours is mine" logic. You deserve what you work for and earn. State dependency defies liberty.
>> kmc212 Friday, July 3, 2009 1:45 PM

Hilary, can you tell me what a "fair" share is?
>> Consevative Tom Friday, July 3, 2009 10:27 PM