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The Case of the Magically Doubling Health Care Surtax

Only in Democrat Country Does a Tax Hike Equal Taxes Going "Down, Down, Down"

Last night, during yet another attempt to mark up the House health overhaul bill, Rep. Henry Waxman’s (D-CA) House Energy and Commerce Committee took up and voted down (33-25) an amendment by ranking member Rep. Joe Barton (R-TX) to prevent the implementation of a little-known provision in the bill that would cause the highly-publicized surtax on high earners to double if the cost of the health overhaul is higher than expected.

The “surtax” (read: tax increase) “doubles in the year 2013 if there is a study by the Office of Management and Budget that determines certain savings have not occurred,” said Barton. “The effect of the Barton amendment would be that beginning 2013, only those citizens who make over $1 million would have their taxes increased by the surtax.”

The bill currently increases the taxes of those making $280,000 ($350,000 for couples) by 1 percentage point, those making $400,000 ($500,000 for couples) by 2 percentage points, and those making more than $800,000 ($1 million for couples) by three. The provision Barton’s amendment was designed to forestall was an automatic increase of these rates by two percentage points across the board if CBO determines in 2013 that the overhaul is costing more than lawmakers currently expect it to — something that is a near-absolute certainty.

Rep. Greg Walden (R-OR) pointed out that the 2013 increase in the surtax would make his state’s tax rate “the second highest income tax rate in the world.”

“It’s one of the reasons I think that Oregon is second only to Michigan in unemployment,” Walden said.

Rep. Frank Pallone (D-NJ), chairman of E&C’s health subcommittee, argued that the automatic 2013 surtax increase was immaterial because there would be no funding shortfalls due to offsetting “cuts in existing programs, Medicare in particular.” This, of course, begs the question why eliminating a portion of the automatic tax increase — if it is as unneeded as they claim — remains off-limits to Democrats by their own choice.

Further, some Democrats denied that this income tax hike would cause more taxes to be paid — at least by those Americans who weren’t “rich” enough to be fair game for soaking. “American citizens’ taxes are going to come down as a result of this bill,” said Rep. Anthony Weiner (D-NY). “Overall, tax expenditures are going to go down, down, down, and so are non-tax expenditures.”

Such a claim is ludicrous, of course; unless health care is going to become an entirely free enterprise (something that would cause a mass exodus of providers from the U.S.), somebody‘s expenditures are going to go “up, up, up” as a result of this massive exercise in cost-shifting. Further, even if Americans are no longer writing checks to private insurance companies or directly to providers in exchange for coverage and care, they are still paying for health care through another middle-man: the federal government.

Rep. Cliff Stearns (R-FL) called Weiner out on his claim, saying, “Mr. Weiner says we’re going to lower health care costs with his bill. Now, a study by the Joint Economic Committee…shows, in fact, that under this health care bill, health care costs are going up almost exponentially.”

“You’re welcome to get a copy [of the JEC study], Mr. Weiner,” he said.

Of course, neither Weiner nor any other Democrat on E&C will be accepting and reading a copy of that analysis. Heck, according to Rep. John Conyers (D-MI), it’s not even in their job description to read the bill (or to have their lawyers do it for them); it’s just their job to vote to pass it.

COMMENTS

  • http://insureblog.blogspot.com/ hgstern

    With the Cash 4 Clunkers deal circling the drain, my co-blogger has posted a great piece comparing THAT debacle Health Care. Here’s a sample:

    “In less than a week the program ran out of money as people rushed to trade in their old clunker policies for the newer government approved plans with higher benefits and taxpayer subsidized premiums.”

    link: http://insureblog.blogspot.com/2009/07/cash-for-health-insurance.html

    Why does ANYONE trust Washington (and esp Waxman) on this stuff?

  • jackhammer

    In your post you say:

    “unless health care is going to become an entirely free enterprise (something that would cause a mass exodus of providers from the U.S.),”

    One of the only things keeping the renumeration attractive in Canadian Health care is the real and serious threat that if doctors and nurses cannot earn a decent living in Canda, they can easily move to the USA. The move from Canda to the USA, and vice versa is a relatively easy moe. There are by and large no language barriers, no real difference in lifestyle, no great distances, or anything else.

    This is definitely not the case with moves to almost anywhere else, including Great Britain or Australia.

    So my question, is “where would all these doctors and nurses emigrate to?”

    Without the threat of America, where highly qualified medical professionals can ply their trade free of massive government constrictions, many countires would definitely start paying their doctors far less (as France and Germany do). The only real threat would remain doctors choosing not to practice, or opting out of all insurance systems. This does cause long term doctor shortages, as many parts of germany are well aware of, that are usually filled through wage arbitrage with recent immigrants from systems where the pay scale is even lower.

    The simple fact is that right now people throughout the world who are excellent can flee their state systems and practice in Aemrica, where they can potentially earn a lot more than at home…..but if america changes that system…there is no other place….

    It is a similar system with the pharmaceuticals…..if Canada did not have the USA to piggy back on, there would be no innovation or impetus ot make new and better drugs.

    The world of health care needs the USA as the paragon of freedom.