Thursday, July 9, 2009

Healthcare Reform: Taxing the rich to pay for quality, affordable healthcare for everyone

According to an Associated Press story posted on the Virginian Pilot Online last night, House Democrats are floating the idea of a “surtax” on individual incomes over $200,000 per year and couples with incomes over $250,000 per year. My first response to this is sure. Why not? Didn’t these folks get lots of tax breaks under the Bush Administration and a Republican controlled House and Senate until they lost control in 2006? But, the real value of incomes over $200,000 and $250,000 varies widely geographically.

To play a little “devil’s advocate,” here are a few thought on what will be said of this proposal:

Isn’t this just taxing a person’s prosperity?

Isn’t this is just warmed over wealth redistribution, the next step to
(dare I say) Socialism?

Why should someone making over $200,000 a year be penalized for some else’s
inability to earn a living through innovation and risk-taking and be rewarded
for that lack of skill and savvy?

This is a tax increase. This is worst possible thing that can be done
during a recession, especially one as deep as this recession.

Individuals making over $200,000 per year and couples making over $250,000
per year pay most of the taxes in this country. Why do you want to raise
taxes on these hard working people when they already pay more than their fair

The shouts of “Class Warfare” will travel through the halls of Congress from small government proponents, Tea Bag Party goers, anti-tax conservatives and free market advocates. They will also say, “what about the stimulus money that isn’t getting out fast enough or the TARP money to bail out the GM and Chrysler, or AIG? The economic recovery has been a FAILURE! It’s time to put us back in charge of the Federal Government to halt the march towards SOCILAISM and government run healthcare.” This is just a short list of things that Conservatives will be saying about the “surtax” on incomes over $200,000 per year. The focus will be on the bottom numbers, the $200,000 and $250,000, and not the “above” part. So what does $200,000 of adjusted gross income get a person these days?

Like I said before, the real value of individuals making around $200,000 per year and couples making $250,000 varies widely geographically. For instance the cities and communities in the megalopolis (the area from Boston to Washington, DC), $200,000 doesn’t get you that brand new Honda Accord or the ability to afford a 2,500 square foot house with on a third of an acre of land, supporting a family of four while at the same time trying to save money for college tuition for their kids. $200,000 doesn’t mean the same in real value if you live in places in or around Atlanta, Chicago, Miami, Orlando, or the major cities in California where you are lucky to find a 1,500 square foot house for less than $350,000 or $400,000 that only sits on the ground it was built.

Then again, there are lots of places across this country where earning an income of around $200,000 per year affords you a level of comfort that enables a person or family the opportunity to have that brand new SUV, a home that exceeds 3,500 square feet and sits on an acre of land and the ability to put money away for their kid’s college education. But this all comes down to individual choices on how this money is spent at those levels of income. The one thing that will obviously be glassed over by all these anti-tax conservatives is the fact that individuals earning less than $200,000 or couples that earn less than $250,000 will not be assessed this “surtax.”

So, the question comes down to individuals and couples earning $200,000 or $250,000 (respectively) or more. Have they been paying their fair share in taxes? Again, the focus will be on the magic bottom numbers of $200,000 and $250,000 for conservatives. I haven’t seen the details of the bill or the proposal, but maybe a graduated scale based on geographic cost of living that starts at these levels of income and increases to the target amount of the “surtax,” would be more palatable. The truth is, high income earners haven’t been paying their fair share for a while now and this is one way to nudge them in the direction of investing in healthcare for the common good.

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