Thursday, November 19, 2009

Taxes, Taxes, Taxes: Oh the Joys of Government Health Care

Via Memeorandum

Keith Hennessey outlines all the new taxes in  the Reid Senate health care bill.  His analysis is based on a report by the Joint Committee on Taxation analyzing the revenue provisions in the “Patient Protection And Affordable Care Act.”   I wonder if they think inserting the word "affordable" in these 2000 page behemoths will somehow manage to make them so.  There is nothing affordable about new taxes, which is the only way the federal government can raise revenue - unless we decide to do something outlandish like sell cars.  Take a peek at the affordable new taxes imposed for our affordable new health care entitlement:
  • 40% excise tax on health coverage in excess of $8,500 (individuals) / $23,000 (families). Amounts are indexed for inflation by CPI-U + 1% – begins in 2013 – $149 B tax increase
  • Additional 0.5% Medicare (Hospital Insurance) tax on wages in excess of $200,000 ($250,000 for joint filers) – begins in 2013 – $54 B tax increase
  • Impose annual fee on manufacturers and importers of branded drugs – begins in 2010 – $22 B tax increase
  • Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $19 B tax increase
  • Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $60 B tax increase
  • Cut in half (to $500K) the amount of an executive’s compensation that a health plan can deduct from its corporate income taxes – begins in 2013 – $600 million tax increase
  • Impose 5% excise tax on cosmetic surgery and similar procedures – begins for surgery in 2010 – $6 B tax increase!
Keith does a full analysis of each of the proposed taxes so be sure to read his full post.  There are two major tax increase policies in the bill.  The tax on the cadillac plans is still there; it is merely scaled back due to push back from the unions.  To offset the loss in revenue Reid proposes an increase in Medicare payroll taxes, leaving Reid in the position of defending two major tax increases.  Anyone still want to argue the influence of unions on the Democratic party is not a problem?

The Medicare payroll tax increase proposal is a game changer, essentially creating unprecedented changes in how our government is financed.  The bill would use Medicare payroll taxes to finance a new entitlement.  This would permit use of payroll taxes normally entirely devoted to Medicare to be used where the government sees fit.  This was a "slippery slope" Hennessey found particularly shocking for a Democratic leader to propose.  In the end Hennessey thinks this may be a huge risk for moderate Democrats

Ed Morrissey is not sure it's a big enough risk for moderates who will be under tremendous pressure from an Obama administration desperate to pass something, anything really called health care reform:
Is it as big of a risk for moderates as failing to pass a bill will be for Obama and the progressives?  That’s the big question.  Will people get angry enough over a new government entitlement that purports to solve a real issue for many Americans — the increasing cost of health care?  Never mind, for the moment, that it doesn’t actually solve that problem, but makes it worse.  Most won’t see that until 2013 at the earliest, by which point it will be far too late.
Ironically, there are a few taxes proposed taking aim at the health care industry gullible enough to play along with this administration.  Pharmaceuticals get a new tax on the revenue they will generate because the government will spend more on health care.  Health Plan executives are targeted for limits on their executive compensation.  Hennessey wonders who is next:

It’s terrible policy to single out the compensation of any particular industry.  Wall Street – if this becomes law, you’re next in the crosshairs.
This is gratuitous political punishment of an unpopular constituency.  The section is titled “Limitation on excessive remuneration paid by certain health insurance providers.”  It raises $600 M over 10 years, and is thus insignificant as a pay-for.
How’s that political alliance working out for you guys?

Last but not least comes the cosmetic surgery tax.  How ironic that the only aspect of the health care industry to actually contain costs and lower prices over the years gets a tax penalty for their efforts.  Government involvement in health care, what's not to love?  I am somewhat heartened that the tax would seemingly apply to teeth whitening purely for  a told ya moment with my own dentist who is a liberal but makes a living on cosmetic dentistry.  I think I might actually enjoy pointing out this little tax on my next visit.

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