Fred Hiatt does not think the rich should have to help fund health care reform:
There is a serious case to be made that the U.S. income tax system should become more progressive. The average rate paid by the top 1 percent of households shrank from 33 percent in 1986 to about 23 percent in 2006. At the same time, the share of adjusted gross income claimed by that highest-earning sliver of American society doubled, from 11 percent to 22 percent. So, in principle, higher taxes for the well-heeled could make sense — as part of a broader rationalization of the unduly complex tax code.
But not in practice! Not for health care reform! Not yet! Not now! We’re not ready yet!
But there is no case to be made for the House Democratic majority’s proposal to fund health-care legislation through an ad hoc income tax surcharge for top-earning households. The new surtax would hit individual households earning $350,000 and above. It would start at 1 percent, bumping up to 1.5 percent at $500,000 in income and to 5.4 percent at $1 million. The new levy would begin in 2011 and is supposed to raise $540 billion over 10 years, about half the projected cost of health-care reform. The rest of the money would come from reduced spending on Medicare and Medicaid — though the surtax for the lower two categories would jump by a percentage point each in 2013 unless the Office of Management and Budget determines that the rest of the bill has saved more than $150 billion.
Plus, the rich are going to have to help pay for deficit reduction, so we can’t ask them to help pay for health care reform! It’s not fair! Wealthy people are not used to having to pay for all this stuff!
The traditional argument against sharp increases in the marginal tax rates of a very narrow band of Americans is that it could distort their economic behavior — most likely by encouraging them to put more of their money into tax shelters as opposed to productive investments. This effect could be greatest in certain states, such as New York, where a higher federal rate would add to already substantial state income taxes. The deeper issue, though, is whether it is wise to pay for a far-reaching new federal social program by tapping a revenue source that would surely need to be tapped if and when Congress and the Obama administration get serious about the long-term federal deficit.
Well, Fred, maybe we can have a little extra taken out of your paycheck for that — I mean, seeing as how you’ve been one of the loudest voices defending deficit spending for the various wars and proxy wars the U.S. has been fighting all over the world for the past eight years. Then again, that was money going into those deep pockets, not coming out.
I love Jon Chait’s retort:
No case? Wow. I think the case is straightforward–we need revenue to fund a dire social need, this revenue would come from those most able to bear a higher burden, would probably entail minimal economic harm, and also happens to be political popular. The Post‘s argument against boils down to its assertion that we shouldn’t be “tapping a revenue source that would surely need to be tapped if and when Congress and the Obama administration get serious about the long-term federal deficit.”
So the Post is arguing that the House is depriving itself of the (politically easiest?) source of revenue for future deficit reduction. If this argument is true, I don’t see how it comes anywhere close to backing up the thesis that there’s “no case” for taxing the rich to pay for health care. Nor do I even think it’s true. You could, as the Post prefers, pay for health reform now with a middle-class tax hike, and pay for deficit reduction later with a tax hike on the rich. But it seems just as easy, if not easier, to do it the other way around. After all, very few Republicans support meaningful health care reform, so if you’re not going to get their votes, you might as well pay for it the way you want. (Republicans in the House are going to oppose health care reform regardless of how it’s paid for.)
On the other hand, some people can stand out in the rain for eight years and still not know why they’re soaking wet.
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