Guestposter D.J. Tice: Bush’s new health care idea highlights some Big health-care Questions

January 30th, 2007 – 1:15 AM by Eric Black

President Bush’s new health care proposal shows symptoms of being interesting and maybe even important, if only for what can be learned about the big question of health care by understanding the issues it raises.

Unveiled in last week’s State of the Union message, Bush’s idea is to give Americans a handsome standard income tax deduction for health insurance premium costs. They would get the same standard deduction ($15,000/family; $7,500/individual) as long as they had insurance, whether they purchased it through their employers or on their own, and regardless of its cost or their incomes. But any employer-paid premium above the deductible amount would be taxed.

Predictably, since this is a Bush plan, it earns generally high praise from conservative think tanks such as the Heritage Foundation. Here:

and here:

More notably, the plan gets good marks — though with plenty of regrets that Bush lacks the political capital to achieve anything with it — from the Economist of London.

But now for an almost disorienting surprise. The liberal Center on Budget and Policy Priorities, in a brief statement from its executive director Robert Greenstein, also has a kind word to say for Bush’s idea.

“On the subject of health insurance, by contrast,” Greenstein writes, “the President has shown leadership in placing the tax treatment of employer-based coverage on the table as part of health care reform.”

Yes, that’s what it says. He’s shown “leadership.”

To be sure, Greenstein goes on to signal that CPBB sees serious problems with Bush’s approach (a fuller discussion of those objections will be welcome).

Even so, this is a notable outbreak of civilities across the ideological divide.

It suggests that at least by confronting the flaws in America’s subsidized employment-based health insurance system, Bush has engaged an issue that many people who think about economics, liberal or conservative, believe to be of real importance.

There are enough varied flaws in that system to concern both liberals and conservatives. They’re likely to emphasize different ones.

A liberal critic might focus on problems like these:

· An unlimited tax exclusion for health care fringe benefits is a large tax shelter and subsidy for the affluent, which becomes more valuable the higher one’s tax rate.
· This uncapped subsidy for the haves is in some degree financed by discriminating against workers who have to buy insurance on their own, and generally receive no tax benefit.
· The system makes health insurance a virtual by-product of employment, restricting its “portability.”

Conservatives, for their part, mostly lament the way this lavish but discriminatory subsidy system interferes with market discipline in health care. By ensuring that most health care consumers are unaware of the real costs not only of health care services but even of the insurance through which they receive them, the system, conservatives, believe, encourages over-consumption and eliminates incentives for price competition. One result is even higher prices for those who lack the subsidy.

The Bush plan, or something like it, would be a first step toward leveling the field between those with generous employer-paid health insurance benefits and those without, helping some of the uninsured better afford coverage.

It would also make health insurance costs more visible and tangible, probably inspiring many to shop for less costly alternatives, which in turn would inspire the market to provide them.

Health Care may be the ultimate Big Question in our era — big both in significance and complexity. Any discussion of changing the employment-based health insurance system is alarming to many. That’s partly because there is comfort in not having to fully face health care costs and decisions, and partly because workers and unions fear losing benefits they have won through decades of hard negotiations and sacrifices on other fronts (wages, say).

What’s more, market discipline and cost conscious consumers will do little to resolve what may be the biggest problem in health care – the vast expenses incurred in end-of-life care. Nor will it do much to allow the very poor or the very sick to obtain insurance.

But is it possible that the issue Bush has raised – the vast tax subsidy for employer-paid health insurance – deserves, as CBPP says, to be “on the table as part of health care reform”?

Here, by the way, is a provocative free market perspective on the problems with American health care - the problem of confusing “insulation” with “insurance” — by Cato Institute scholar Arnold Kling.

65 Responses to "Guestposter D.J. Tice: Bush’s new health care idea highlights some Big health-care Questions"

RoyinOslo says:

January 30th, 2007 at 3:25 am

It’s wonderful that the country is finally, finally, finally getting serious about univeral health care. But is the solution going to continue to feather the bloated insurance industry so they can grab the first 22 percent for “paperwork”? Is the tax-side solution going to fail the millions who will still have trouble finding the cash in the first place? And when they can’t find it will they be relegated to public-financed insurance and then be stigmatized as welfare collecting freeloaders?
A serious discussion has to consider some form of single payer system, which cuts administrative costs by two-thirds.
Here in Oslo I saw my doc last week. A physician I chose, in my neighborhood, publically funded except for about 30 bucks from me–a sort of co-pay which he collected himself, no insurance forms, no cashier on the way out–to cover the visit and blood tests.
If I choose to I could go private with insurance and private clinic. It’s called choice, people!

Phoenix Woman says:

January 30th, 2007 at 8:56 am

RoyInOslo: Yeah, isn’t it ironic, that after decades of being told by the conservative think-tanks controlling our discourse that “more government = more expense/red tape/overhead/bureaucracy”, that Norway’s government-run health-care system has LESS expense/etc. than does the US system where several different for-profit entities are squabbling for their cut?

This is the same reason that Social Security is more efficient than privatized pension plans. Social Security’s overhead costs are less than 1%, whereas the US life insurance industry’s overhead costs run to around 14%, and privatized plans such as the UK’s and Chile’s have overhead costs of 14% to 20% or more.

Health Insurance says:

January 30th, 2007 at 9:09 am

It seems that one of the main focuses of President Bush’s plan is to encourage people to move off their employer-sponsored health insurance plans … and into the individual market. My view is that doing so will put many more people at risk of losing that insurance when they need it the most.

Insurance companies make money when people do not use their benefits. Therefore, its in the best interest of the companies to sell policies to healthy people. However, as noted in a front page story in yesterday’s USA Today, people with individual policies are sometimes dropped when they have a serious illness or their rates are raised to such a level they can no longer afford it (“rated-up”).

Additionally, it’s in the best interest of the company to look for reasons not to pay claims. So when someone on an individual policy has a claim, companies are incented to poor over their applications looking for inconsistencies. It makes no difference whether any mistakes on application forms are intentional or innocent — if the insurance company can deny the claim of a seriously ill person it makes more profit.

I applaud the “idea” of individual ownership of insurance, and changes in tax law to encourage people to be more discriminating consumers — awareness of medical costs is an important component to the reform of the system. Too often when the employer pays the true cost of utilizing health care is masked.

However, any plan that moves people from the relative safety of a group plan, to the more trecherous waters of individual coverage, has consequences.

I’d like to see a nationwide (or state-by-state if necessary) availability of a basic, no-frills guaranteed issue policy that would provide an affordable option that provides safeguards against the types of cancellations and rating up we now see in the individual market. Such a plan would have wide-spread enrollment so the risk would be spread across a much larger group.

Otherwise, this tax plan looks more like a way for the President to remove the “burden” of providing health care to employees, than it does anything else.

bsimon says:

January 30th, 2007 at 10:32 am

‘Health Insurance’ writes
“Otherwise, this tax plan looks more like a way for the President to remove the “burden” of providing health care to employees, than it does anything else.”

That’s one way to look at it. And, in one sense, that’s a fair assessment. The question, though, is whether that is or is not a worthy goal. I say it is a worthy goal. Employers first began offering health insurance as a benefit in order to attract workers – a ‘hey, here’s another great reason to work here’ incentive. But its an extremely inefficient way to deliver health care coverage. In addition to the inefficiencies of health insurance plans already described by other posts, there’s added overhead in the Human Resources departments in getting employees signed up, processing claims, processing HSA forms, etc. It is senseless to use employer-provided health care as the default coverage available to the US population. There should instead be a universally-available bare-bones service for all Americans. Let employers provide health coverage ‘upgrades,’ if they find that to be a valuable incentive they can offer to attract employees. Otherwise, let employers get out of the health care provider business.

I mostly agree with the assessment by Mr Greenstein, that the President’s plan is the opening of a dialogue. I don’t think the plan, as delivered, addresses the worst problems of the status quo, but it certainly does work as a starting point.

Bernice Vetsch says:

January 30th, 2007 at 12:32 pm

Shame on you, Mr. Tice, for taking a quote from the Center on Budget and Policy Priorities that, out of context, SEEMS to support the Bush health ideas.
They were praising the president for “placing the issue of employer-based coverage on the table,” yes, and many in favor of a single-payer universal health care plan agree that health insurance should be separated from employment. BUT, they were not approving his plan. They continue, “But the President has undermined his initiative by tying it to an ill-designed proposal that would erode incentives for employer-based coverage — the primary means of pooling healthier and sicker Americans together to keep insurance affordable — without providing an alternative way of effectively pooling risk. The President’s plan would drive more Americans into the deeply flawed individual health insurance market, where people with health conditions are often refused coverage or can only get it at exorbitant cost.”

Bush’s plan offers an exemption of income taxation on $15,000 to those who purchase their own health insurance. What possible good can that do people who earn about $20,000 a year???? His plan protects the wealthy, just like his other tax policies.

The surest way to reduce our national health care bill is to broaden Medicare to cover the entire population, making the risk pool as large as it can possibly be. No longer would over two million insurance company employees work full time denying care, No longer would we as a society pay 20-25% in the administrative costs incurred by private insurance companies (unless we wanted coverage beyond Medicare) and would pay only the 2 to 3% in administration that Medicare costs.

The Bush plan is another example of the false belief that the market works perfectly (the invisible hand), when the truth is that a mixed economy works best, with the private sector building wealth and the public sector handling those items that assure the public good.

(And re: Bush’s denigration of “cadillac benefits,” I do believe he is the only American who has five doctors administer a seven-hour annual physical to him. Has he considered the cost and shopped around for something cheaper? I think not.)

Justin C. Adams says:

January 30th, 2007 at 1:15 pm

I concur that the single largest problem with the US system and with Bush’s plan is the tethering of healthcare benefits to employers.

I understand why small government ideologues cannot tolerate the idea of a european style or canadian style system, and to be sure, there are problems in every nation’s healthcare delivery system.

But what I don’t understand is why our business community at large hasn’t demanded that the right wing serve its interests, like it usually does.

Clearly, a few particular lobby groups who have vested interest in the current system have held sway over the congress and the white house for the past several years, to the detrement not only of the healthcare consuming public, who experience limited access and economic hardship when they are treated, but also to the GDP.

The cost of healthcare as a part of producing an American automobile, for one example, renders our producers unable to compete in the global marketplace against other producers who do not have to bear this cost.

Mr. Bush’s plan does not address this issue adequately. As has been pointed out above, this ploy has very little to do with healthcare and very much to do with increasing the regressivity of the tax code, so that the ‘winners’ can win more often and to a larger extent.

Which brings me back to yesterday’s post, on the historic legacy Mr. Bush will leave. Regarding the Iraq war, I agree with EB that it will be years before we can come to any real conclusions. We will need to see what longer-term ramifications unfold. Mr. Bush, like most of our most lauded presidents, has been very bold in his exercise of executive power. History is generally kind to presidents who have asserted executive power agressively – Lincoln, FDR and Reagan, to name a few. Yet, I cannot help but think to myself that Mr. Bush’ most important domestic contribution has been his redistribution of the federal tax burden.

On this particular matter, I think the historical record has been clear and will continue to be. Trickle down economics do not work, and as a result of the more regressive tax system, social stratification has increased. As the longer term implications of our more stratified society percolate to the surface, I think it will be impossible for Bush to be considered among the great bold leaders in our history – even if Iraq were to resolve peacefully and become an oasis of democracy whichh spread throughout the middle east, I think that his domestic blunders, typified by this HC proposal, will far outweigh his foreign policy iniatives in the balance.

Mark says:

January 30th, 2007 at 1:30 pm

“I say it is a worthy goal. Employers first began offering health insurance as a benefit in order to attract workers – a ‘hey, here’s another great reason to work here’ incentive. ”

It was offered as a benefit to attract workers, but in a much different context. The inclusion of fringe benefits such as health insurance started after WWII when wages were controlled. Companies could only pay workers a limited amount fixed by the government. Companies that needed additional labour needed to find a way of paying a premium price above the wages controlled by law. So, they offered health insurance.

“Trickle down economics do not work, and as a result of the more regressive tax system”

Ridiculous. We have had almost continual growth since 1983 in this country. The Democrats had 8 years to “fix” the “failed” trickle down economic program and never did (unless you call the minor tax increases that Clinton did a reversal but the top marginal tax rate in 1981 was 70% and Bill Clinton raised it to 39.6).

The claim that taxes are REGRESSIVE is one of the most ludicrous arguments a person can make and frankly shows that the person really does not care about any real facts.

The only tax that can be considered to be “regressive” is Social Security and that is because this tax is associated with a fixed benefit program that will pay out benefits based upon your contributions.

Mark says:

January 30th, 2007 at 1:48 pm

And further, the reason why employees want to stay in the employee coverage has nothing to do with health care either, or the effectiveness or efficiency of fringe benefits. In fact, the criticism above about the “wisdom” of moving insurance from employer based is mistaken to assume that the all insurance offered by an employer is “group” coverage.

The reason why employees wish to get fringe benefits is that they are non-taxed. Therefore, you can get health, disability, and other insurance from your employer and not pay taxes on that compensation. If the employer is paying, lets say $400 per month on your fringe benefits, for you to make an equivalent amount in income you would have to be paid $5-600 or more.

The mistake we have made over the last two decades is to confuse the concept of “insurance” with who pays your medical cost. Insurance is a product that is purchased to cover any unexpected large costs. But in the US today we think health insurance is something that should pay ALL health care costs.

The average person who has health insurance is tremendously over insured. Paying for a product that will pay all of your bills is the highlight of inefficiency.

Part of the story behind this is that we have convinced ourselves that something that is “insured” is free and that we all get some sort of multiplier to our money.

Paul S. says:

January 30th, 2007 at 2:51 pm

Shame-decrying from Bernice (I suspect Doug Tice can handle it); outrage about conservative think tanks somehow controlling her discourse from PW: on we roll, I guess. Rationality from bsimon, though, as usual.

Mark says:

January 30th, 2007 at 3:27 pm

Again, the proponents of “universal” health care try to fool us with two myths.

The first myth is that universal health care will make such immediate savings because of the administrative savings over private insurer. This myth is listed first because it is the most ridiculous.

Insurance administration is done because there are limits to the types and quantities of procedures that are done. Unless government in a universal health care system is not willing to impose any restraints then the same administration must be done. The fact that government (through medicare and medicaid) pushes much of this administration on the provider does nto mean that the adminstrative costs go away.

Second, the proponents of such systems pretend that it is “free” for the users. The universal fact that nothing is free in this world seems to escape them. Everything has a cost, and the cost is borne by the citizens in lower wages and lower employment.

Third, the proponents pretend that such systems deliver better service. This myth is easily countered by demonstrating that the waiting times for procedures, if the procedure is even available, are dangerously long. The fact is that health care in the US is much superior in quality and delivery than anywhere in the world.

bsimon says:

January 30th, 2007 at 3:39 pm

Mark writes
“The claim that taxes are REGRESSIVE is one of the most ludicrous arguments a person can make and frankly shows that the person really does not care about any real facts.”

Ah, back to the insults in lieu of facts.

The claim that the tax code is not regressive is indicate of head-inserted-in-posterior disease. When one’s cranium is thusly insulated from the real world, it is easy to focus one’s argument on a small fact that supports one’s position, like tax rates, rather than on the big picture, which includes things like tax writeoffs. For instance, the mortgage tax credit is extremely regressive.

Jay says:

January 30th, 2007 at 3:52 pm

The passage in one of Mark’s post that needs to be focused on is the following:

“The mistake we have made over the last two decades is to confuse the concept of “insurance” with who pays your medical cost. Insurance is a product that is purchased to cover any unexpected large costs. But in the US today we think health insurance is something that should pay ALL health care costs.”

Health insurance is not synonomous with free health care. That’s like asking your auto insurance company to pick up the tab for gas. Everyone likes to chatter endlessly on about the escalating cost of health care in this country, but how much of that is due to people using more services than they really need, simply because they are free (or at least cheap). Medical coverage should prevent against major bills that would directly and immediately cause significant financial hardship. That’s it.

Mark says:

January 30th, 2007 at 4:00 pm

“When one’s cranium is thusly insulated from the real world, it is easy to focus one’s argument on a small fact that supports one’s position, like tax rates, rather than on the big picture, which includes things like tax writeoffs. For instance, the mortgage tax credit is extremely regressive.”

This is a ridicuous statement.

The way to measure this is effective tax rates. The effective tax rates for the bottom 40% of income earners is negative, and the effective tax rates increase over income. To argue otherwise is ignorant.

bsimon says:

January 30th, 2007 at 4:05 pm

“To argue otherwise is ignorant.”

Viva la ignorance!

bsimon says:

January 30th, 2007 at 4:08 pm

Jay writes
“Medical coverage should prevent against major bills that would directly and immediately cause significant financial hardship. That’s it.”

true enough. That’s why I want it.

I wonder if and/or how this ‘minute clinic’ concept will work out? Seems like an interesting idea.

bsimon says:

January 30th, 2007 at 4:12 pm

“The effective tax rates for the bottom 40% of income earners is negative, and the effective tax rates increase over income.”

Got data?

I’m not sure that the bottom 40% of earners are relevant, since they’re all likely near or under the poverty line. I’m more interested in comparing the masses to the “have mores.” I’m guessing that the mortgage writeoff I get is a pittance compared to people making twice what I do. And, frankly, that tax incentive is not what made me a homeowner; I’d be in a house with or without it. Which makes me wonder – is the regressive mortgage writeoff a cost-effective program?

Jay says:

January 30th, 2007 at 4:20 pm

Just for reference, I read an article recently that stated the US Census Bureau considers that “bottom 40%” to be those with a household income of less than $36,000/yr. For what its worth, the top 20% of income earners were defined as those with a household income of $91,705 or more.

On the mortgage writeoff issue, I remember discussing that with someonme a while back (cannot recall exactly who), and we seemed to agree that the mortgage deduction on a first home was a good idea to try and reward/help those who want to break into homeownership. Interest on additional properties, second mortgages, home equity loans, etc strike me as deductions that should be eliminated.

michaelblaine says:

January 30th, 2007 at 5:19 pm

Mark,

If you want a zero tax rate to apply to you and mommy, move to Guatemala where you will be able to evade with impunity. Otherwise, stop your drivel and join reality.

michaelblaine says:

January 30th, 2007 at 5:23 pm

It should not be the job of employers to provide healthcare — that is not why they’re in business. Relieving business of this expectation will produce an explosion in productivity and profitability.

A universal healthcare system organized by the federal government is the efficient solution.

When a baby is born, he or she should be handed his/her health insurance card, and this will ensure coverage until death. No moving into and out of different plans again and again over a single lifespan.

One card, one system = mass efficiencies, and massive savings.

Mark says:

January 30th, 2007 at 5:23 pm

Using 2003 data the effective federal income tax rates by filing quintile is

lowest -4.4%
second 1.8%
middle 5.0
fourth 8.3
highest 17.0

I measure the “bottom 40%” not by the filers above, but by actual income. A significant percentage of people do not file income taxes. Hence the claim that the bottom 40% have a negative tax rate.

Further, these negative rates do not include transfer payments, which can be seen as negative taxes.

michaelblaine says:

January 30th, 2007 at 5:26 pm

Mark:

Once again, you have left out state and local taxes and fees.

michaelblaine says:

January 30th, 2007 at 5:38 pm

Universal healthcare coverage could be financed by a wealth tax: it wealth, even more than income, that is distributed terribly unfairly in the US.

Rich deadbeats like Paris Hilton can fund our new system.

Mark says:

January 30th, 2007 at 6:12 pm

“Once again, you have left out state and local taxes and fees. ”

The facts are still the same on the state level. The bottom two quintiles in the state of Minnesota pay negative property and income taxes.

If you look at direct taxes paid in the state: income, sales, property, and excise then the taxes are regressive. The top decile pays a tax rate of 7.30% and the bottom pay decile 4.62% (the next deciles pay 2.62, 3.1, 4.26 respectively).

The fact that the study has some inherent allocation problems like claiming that the bottom decile has 80% of its expenditures being eligible for sales tax is not that important. Even with this result we get “progrestivity”.

The only way that we get any types of regressive measures is if we allocate the sales taxes paid by business and corporate income taxes in a very suspect manner.

Therefore, if you support the fact that taxes in MN are regressive, the taxes you need to be calling for a repeal are the corporate income tax and the sales taxes on business.

Mark says:

January 30th, 2007 at 6:19 pm

And, these types of reports use very dubious assumptions. For example, consider the sales tax allocation I spoke of.

The bottom quintile has an income of $0-8354. According to the assumptions, this group paid $63,972,000 in sales taxes (all data 2002) for an “effective” sales tax of 5.2% (the group had a total income of $1,235,590,000.

If you had an income of $8,354 and paid 5.2% of your income in sales taxes this would mean a total of $434 paid in sales taxes. Now, with a sales tax of 6.5% this represents purchases of $6683 which happens to be exactly 80% of $8354.

Now, clothes, medical expenses, food, and shelter are not taxed. This means for the assumptions to be meaningful that the poor spend only 20% of their total income on items like above, or about $1700 a year.

There is some plausibility to this but what it means is far from what the people who claim that taxes are “regressive” intend. That is, in reality, the poor people are not paying for their food, clothing, shelter, and medical expenses. These are being provided for them.

bsimon says:

January 30th, 2007 at 6:46 pm

Mark says
“The fact is that health care in the US is much superior in quality and delivery than anywhere in the world.”

Mark, you forgot an asterix. It should be as follows:

“The fact is that health care in the US is much superior in quality and delivery than anywhere in the world.*”

* For those that receive it.

michaelblaine says:

January 30th, 2007 at 6:57 pm

“Many people think that Social Security is a progressive program which redistributes income from the rich to the poor. But according to new research by Julia Lynn Coronado, Don Fullerton, and Thomas Glass, Social Security does not redistribute from people who are rich over their lifetime to those who are poor. In fact, it may even be slightly REGRESSIVE.

–The Progressivity of Social Security (NBER Working Paper No. 7520)

bsimon says:

January 30th, 2007 at 7:39 pm

“Social Security does not redistribute from people who are rich over their lifetime to those who are poor. In fact, it may even be slightly REGRESSIVE.”

Curious. Were I to make a guess, it would be that rich people, on average, live longer and thusly collect more. Though that is merely a guess.

Charlieq says:

January 30th, 2007 at 9:05 pm

Mark makes some sweeping statements and quotes unattributed data on tax regressivity. Caveat emptor.

Simply put, a regressive tax claims a higher percentage of income from a lower paid person. The income tax is progressive. Social Security tax, gas tax or cigarette tax are regressive. What matters in the end is the overall progressivity/regressivity of the tax code, which should be fair for all.

The State of Minnesota tracks tax incidence, which is a measure of all state and local taxes as a percent of income. It’s the best measure we have of the relative progressivity of taxation in the state. You can see the report here:

http://www.taxes.state.mn.us/legal_policy/research_reports/content/incidence.shtml

It shows that the middle pay relatively more than taxpayers at either extreme. It does not take into account federal taxes, which are progressive (income) and regressive (SSI) and deductible on the Minnesota return (higher earners get higher deduction).

Finally, Mark is correct about business taxes being regressive. They almost always get passed on to consumers.

I’ve found at least half the people talking about this topic view it through an ideological lens. If they don’t cite actual data or analytical sources, feel free to ignore them.

michaelblaine says:

January 30th, 2007 at 9:12 pm

bsimon:

Your guess is correct!

And, thank you, Charlieq, for some rational and relevant comments and facts.

RLW says:

January 30th, 2007 at 9:27 pm

A fundamental flaw with shifting more of the cost of health care to individuals with various self-managed or high-deductible plans is that you will have the same old problem of people not wanting to pay for preventative services, and not going to the doctor for the cough until it has turned into pneumonia at 3:00 a.m. on a Sunday and they end up in the emergency room gasping for breath and headed for the ICU. You can say it’s their own damn fault for not going in sooner, or not getting their colonoscopy, or their mammogram, or whatever, but when money is tight, decisions get made. And, frankly, big-screen TVs are purchased, too. It’s a multi-faceted issue.

But in an economic sense, it’s also problematic, because right now we ultimately do not roll patients out into the street who can’t pay. The premature baby gets admitted to the NICU regardless of the parents’ ability to pay. I really like the fact that we will take care of people who need medical care; in much of the world this is not the case. But, in an economic sense, if you pay for the big medical disasters, you don’t want to count on people to sacrifice up front to make the best medical decisions. Lots of people make very poor choices–they smoke, they’re overweight, they don’t exercise…perhaps redemption is part of our national psyche, you blew it, but we’ll give you another chance. I like it that way.

michaelblaine says:

January 30th, 2007 at 9:29 pm

Yes, RLW — the very best national healthcare policy would ensure that all kids get the medical care and attention they need to stay healthy, especially from ages zero to five.

Mark says:

January 30th, 2007 at 9:38 pm

“Mark makes some sweeping statements and quotes unattributed data on tax regressivity”

If you think the data is incorrect you are welcome to post your own data.

” It’s the best measure we have of the relative progressivity of taxation in the state.”

And again, this is ONLY true if you include an allocation of taxes that business pays and believe their allocation of the numbers.

Again, if you want to believe that taxes are regressive then the way to fix it is to eliminate corporate income taxes and the sales taxes that businesses pay because these are the taxes that when allocateed make the taxes “regressive”.

Otherwise, the direct taxes are very progressive as anyone who actually analysis the data will verify.

The problem is that the proponents of a “regressive” tax solution is to raise direct taxes on incomes and investment.

Mark says:

January 30th, 2007 at 9:47 pm

“because right now we ultimately do not roll patients out into the street who can’t pay. The premature baby gets admitted to the NICU regardless of the parents’ ability to pay. I really like the fact that we will take care of people who need medical care”

Then why do the liberals deny this fact? Especially when this fact prevents us from improving the delivery of such services.

Lynda says:

January 30th, 2007 at 10:10 pm

“because right now we ultimately do not roll patients out into the street who can’t pay. The premature baby gets admitted to the NICU regardless of the parents’ ability to pay. I really like the fact that we will take care of people who need medical care”

Of course, there had to be a law passed to prevent patient dumping (42 U.S.C.S. 1395dd)

What it boils down to, is we pay more per capita for health care than any other industrialized nation and have the least to show for it in terms of health outcomes. http://dll.umaine.edu/ble/U.S.%20HCweb.pdf

Mark says:

January 30th, 2007 at 10:18 pm

And again, I am going to demonstrate just one aspect of suspect allocations in this data (which by the way is the same data source whathisname cites above).

According to their data the lowest decile of income groups has a total household income of 1,235,000,000. From this total they pay, according to the data table, 63,972,000 in sales taxes. This is 5.2% of their total income.

Ok, the income breakdown for the bottom decile is between $0-8354 in total household income. If a person who makes $8,354 pays 5.2% of their income in sales taxes, this totals $434.41 a year.

To determine the total value of purchases to pay a sales tax of this number we divide $434.41 by the actual sales tax, which is 6.5%. This total is $6683.20, which is exactly 80% of $8354.

Again, if you cannot see the problem with such an allocation, then your opinion does not count.

Food, shelter, clothing, and medical costs do not fall under the sales tax. It is assumed that most poor people have the majority of their income being spent on such necessities of life. However, the state of MN’s allocation of sales tax assumes that a small proporation of a poor person’s income is spent on such necessities and that they have substantial amounts of money as disposabal income to spend on items that do have sales tax.

When you find that the assumptions of such reports are as flawed as this, then the entire conclusions should be disregarded.

michaelblaine says:

January 30th, 2007 at 10:34 pm

Milton Friedman once proposed a “negative income tax” to ensure that every American enjoyed a minimally-dignified material existence.

Let’s bring this idea back.

Mark says:

January 30th, 2007 at 10:48 pm

“Milton Friedman once proposed a “negative income tax” to ensure that every American enjoyed a minimally-dignified material existence.

Let’s bring this idea back”

Again, it is SO easy for you to reveal your ignorance. This is also known as the Earned Income Tax Credit that has been enacted since 1975.

Maybe instead of just shooting off your mouth and trying to act all Ivy League smart you should actually know what the f you are talking about. Of course, that really limits the topics you can discuss but it is good sound policy.

Charlieq says:

January 30th, 2007 at 11:01 pm

” It’s the best measure we have of the relative progressivity of taxation in the state.”

Mark says: “And again, this is ONLY true if you include an allocation of taxes that business pays and believe their allocation of the numbers.”

Mark, this is true, and I’ll explain why for those whose understanding of what’s true is not clouded by what they believe. You are free to post your claim for a third time, but it still will not be true.

The business taxes you don’t think should be included in the calculation are there for the following reason — their cost is passed on to the people who buy the products. Business may write the check to the government, but the consumer pays.

Think about it. You run a business and you don’t like taxes. So when your business is taxed, you have three choices: Pay your employees less over time; pass on the cost to customers or push it back on suppliers; or pay it out of your profits. Business owners, myself included, will choose door number three only as a last resort.

That’s why the state figures weigh business taxes as regressive. We actually agree that taxes on business are not desirable, even if for different reasons.

The other part of your post says: “Ok, the income breakdown for the bottom decile is between $0-8354 in total household income. If a person who makes $8,354 pays 5.2% of their income in sales taxes, this totals $434.41 a year.”

No one who studies these numbers would make any broad assumptions or conclusions based on the bottom decile, but those people still have to be included in the overall population because they exist. Counting the income and spending of the poor is simply too iffy, for some reasons you cite and some you don’t.

It’s a lot more productive to look at the other 90% of the population and to avoid absolutist declarations based on a thin assumption of your own. More people might try to understand what you are saying.

Mark says:

January 30th, 2007 at 11:14 pm

“You are free to post your claim for a third time, but it still will not be true.”

But it is true. For you to be TAXED indirectly with a tax passed on by a business you must do purchase something of value to create that transaction. You get the full value of the product. If you did not you would not purchase it. The case for such indirect taxes is weak.

Even if that were not the case, however, the allocation of the indirect taxes is a weak one. Again, how the numbers are allocated across the deciles is very suspect.

For example, the corporate tax is weighted to the lowest decile as 0.62% of their income but only 0.18% of the top decile. There is absolutely no rational for such a distribution, except that the study is trying to make a political case.

For example, very little of what I purchase, including my home and financing, does not have the corporate income tax and other business tax pushed into the cost.

So, to not weight these allocations as income is weighted makes the study suspect.

It is clear that people like you really do not look at the report. You accept its conclusions and do not even bother to try and understand the data.

Mark says:

January 30th, 2007 at 11:17 pm

‘No one who studies these numbers would make any broad assumptions or conclusions based on the bottom decile’

This is just ridiculous because everyone who claims taxes are REGRESSIVE certainly does.

michaelblaine says:

January 30th, 2007 at 11:20 pm

Mark:

The EITC is a highly watered down version of the Negative Income Tax, or NIT — the proposal first made by Friedman in 1962 and which never came close to being fully implemented.

So, your comments were erroneous. Go back to your mom’s money and think about the ramifications of the mass death your government has wrought in Iraq.

Mark says:

January 30th, 2007 at 11:30 pm

“The EITC is a highly watered down version of the Negative Income Tax”

Whatever. The EITC is a negative income tax that gives people of limited income money. That fits the definition of a negative income tax completely. Enough said.

Mark says:

January 30th, 2007 at 11:35 pm

“Go back to your mom’s money

Your jealousy is very revealing and is the basis of your’s and other such thinkers politics. You just cannot stand that there are people who are more succesful than you.

john sherman says:

January 31st, 2007 at 12:21 am

Bush’s proposal is another attempt to avoid what every other industrial democracy has figured out: universal health care through the government.

As I recall the argument for one of the previous alternatives, the HMO’s, the idea was they would save money because people would practice preventive medicine and get shots and tests, etc. because they wouldn’t cost people anything directly, and this would save money in the long run.

Now we’re being told that people ought to suffer those same costs so they would know how much medicine costs and, therefore, not spend money recklessly. Well, which is it? Are tests, shots and frequent visits to the doctor ultimately economical or wasteful?

I will say this for Bush: he may have figured out a way to tax people for belonging to unions. What really drove the employer provided health insurance was union contracts; the UAW set the standard in the 60′s. The odds are that working people with really good health insurance got it either directly or indirectly through a union. Why tax this one fringe benefit and not all of them? I’m in favor of treating all benefits as income and taxing it.

The Donald says:

January 31st, 2007 at 12:58 am

Is it any wonder why Westerners are now flocking to Singapore and India for medical procedures? Go to those countries and you get an itemized price sheet for every procedure. Not only is it damn cheap, you understand what you’re paying for. Oh, and the surgeons are world class clinicians.

Not like the group(mal)practice hacks at Allina. I wouldn’t let those quacks carve my turkey.

Charlieq says:

January 31st, 2007 at 5:09 am

Mark says:
“For you to be TAXED indirectly with a tax passed on by a business you must do purchase something of value to create that transaction. You get the full value of the product. If you did not you would not purchase it. The case for such indirect taxes is weak.”

I didn’t say a passed-through tax diminished the value of a product, just that the business has ways to pass it on in a way that doesn’t cost its owners. One of those is in the price of products. The other is in the price paid labor. Taxes may start uphill, but they tend to flow downhill, like everything else.

The whole tax question is related to health care, but the regressivity discussion is drifting off topic. You disagree with the Minnesota Department of Revenue’s data and analysis, and call them political. You call their assumptions about regressivity weak. So, okay, we disagree.

michaelblaine says:

January 31st, 2007 at 5:55 pm

‘Mark says:

January 30th, 2007 at 11:30 pm

“The EITC is a highly watered down version of the Negative Income Tax”

Whatever. The EITC is a negative income tax that gives people of limited income money. That fits the definition of a negative income tax completely. Enough said.’

I was clearly referring to Milton Friedman’s specific Negative Income Tax (NIT) proposal, not some general concept. So your “whatever” doesn’t cut it.

‘Mark says:

January 30th, 2007 at 11:35 pm

“Go back to your mom’s money

Your jealousy is very revealing and is the basis of your’s and other such thinkers politics. You just cannot stand that there are people who are more succesful than you.’

No, I suspect your mom has done all the work in the family and now you’re riding on someone else’s coat-tails: you’re a poseur with the luxury of spouting unexamined free-market rhetoric. That is very off-putting.

Also, I can’t stand your blase attitude toward the massive death and destruction in Iraq. Show some empathy: each person gets only one life, and it is precious.

Full Frontal Liberalism says:

January 31st, 2007 at 10:33 pm

Trial Lawyers are one of the biggest reasons why the cost of health care is so high. Tort reform is severely needed, but Big Trial Lawyer pays off the democrat party to block it.

Mark says:

February 1st, 2007 at 5:44 pm

“No, I suspect your mom has done all the work in the family ”

Snore, you can “suspect” whatever you may. I am in my 40′s and my mother has run her business for only the last 8 years. I was very succesful before she became “rich” and have been succesful after she became “rich”.

” You disagree with the Minnesota Department of Revenue’s data and analysis, and call them political. You call their assumptions about regressivity weak. So, okay, we disagree. ”

But the only reason why we disagree is that you just blindly agree with anything they say. It fits with what you want to believe.

Again, for example, the study’s numbers assume that 80% of the lowest deciles income is spent on items that are subject to the sales tax. Do you think that is a reasonable assumption? If you do, then you are arguing that the poor have a much higher level of disposabal income than I do when in general the opposite is the most common assumption.

What this indicates is that for poor people much of their “income” does not show up in the data. The lowest decile in that study had a household income of $8354. Clearly they have other sources of income to pay for their real necessities like housing, food, and health care. Of curse, this income is not included on the data and if it was it would NOT demonstrate the regressive taxes that so many liberals want to believe.

Then when you add the fact that the only way to make taxes “regressive” is to include indirect taxes the entire claim loses merit. The poorest income groups have negative income and property taxes.

Believe what you want to believe, but sticking with such a discredited notion is akin to believing in the Easter Bunny.

Dora says:

February 2nd, 2007 at 3:18 pm

full frontal, when your Aunt Sally suffers a bad outcome because of an incompetent medical provider, you’re going to run to an evil trial lawyer in order to receive compensation to take care of Aunt Sally for the rest of her life.

It has been shown over and over again that trial lawyers are not the reason health care costs are so high. Drop the rw talking point and get some facts.

Dora says:

February 2nd, 2007 at 3:22 pm

Oh and btw full frontal, you fit right in with the unintelligent rw if you don’t even know when to use a noun or an adjective when referring to the party of the Democrats.

dare2sayit.com says:

February 2nd, 2007 at 4:44 pm

Dora,

Quit picking on Full Frontal Liberalism.
He(or She)is right about Big Trial Lawyer being a huge part of the health care problem. When defending trial lawyers, liberals don’t seem to mention all the expensive extra and unnecessary tests doctors need to perform to protect themselves against predator lawyers in the event something unexpected happens.

Trial lawyers need to be put on a leash, but they pay off the liberal deomocrat party to preserve their scam.

Dora says:

February 2nd, 2007 at 5:19 pm

That’s bs DTSI and has been debunked on more than one occasion. And you’re as ignorant as full frontal with your inability to correctly refer to the party of the Democrats. You really should educate yourself. Even Bush acknowledged his mispronunciation. You and full frontal, gee so similar. go figure.

dare2sayit.com says:

February 2nd, 2007 at 5:43 pm

Dora,

It was probably debunked by liberals. When you hear about the multi-million dollar mansions liberal preditor medical malpractice trial lawyers like John Edwards are buying, you would have to be a fool not to realize that this money could be better used to help sick people. Sure hospitals and doctors need to avoid mistakes as much as possible, but Edwards’s 35% cut of the awards is insane and hurts health care all around. We can thank the democrat party for allowing this scam to continue. After all, trial lawyers are the main contributors to the democrat party.

Dora says:

February 2nd, 2007 at 7:50 pm

If you can’t get the name of the political party correct that you try to malign don’t expect anybody to take your comments seriously. Are you really that ignorant or is it a deliberate slur?

dare2sayit.com says:

February 2nd, 2007 at 9:07 pm

Dora,

My hands are still frozen from our deep freeze, and it will be the coldest it’s been in years tomorrow. If I can save a few keystrokes and still show the same thing, I’ll do it. Why does that bother you?

dare2sayit.com says:

February 2nd, 2007 at 9:11 pm

And Dora,

It’s funny how you avoid the facts by concentrating on how I refer to the democrat party instead. Go figure….

Dora says:

February 2nd, 2007 at 10:24 pm

hahaha, yeah, it’s b/c your little hands are cold. That’s a big load of bs DTSI. So it is a deliberate slur then. Of course nobody is surprised by that. dare2slurit is a much more accurate name for you. I’m done reading anything from you. Slur on!

dare2sayit.com says:

February 2nd, 2007 at 11:27 pm

Dora,

I guess you’re not the brightest bulb on the tree are you? I was trying to get you going on the liberal “Global Warming” political movement with our frigid weather. Did you know the high temp on Sat. will be the lowest in years?

Susanne the infidel says:

February 3rd, 2007 at 11:45 pm

dare2, stop slurring.
Hey, I know you are a conservative and like beer as much as the rest of us, but stop slurring.
Dora and Co. don’t understand English if it is slurred.

bambino says:

February 17th, 2007 at 11:17 pm

Interesting comments.. :D

uomo says:

February 26th, 2007 at 5:20 am

The information I found here was rather helpful. Thank you for this.

napoli says:

March 13th, 2007 at 2:20 am

E evidente che il luogo e stato fatto dalla persona che realmente conosce il mestiere!

cannavaro says:

March 17th, 2007 at 7:24 am

Lo trovo piuttosto impressionante. Lavoro grande fatto..)

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