A Nightmare For Healthcare In America

Issues & Insights posted an article today about Elizabeth Warren’s healthcare plan for America.

These are some highlights from the article:

So Warren simply waves her magic wand and makes $14 trillion in costs disappear. And how does she cut Medicare for All’s price tag by 41%?

By proposing:

    • impossibly deep cuts in drug prices,
    • devastating cuts in payments to hospitals and doctors,
    • and entirely unrealistic claims about overhead costs.

Even with Warren’s phony price tag of $20.5 trillion, the taxes required are truly astronomical. Warren says businesses would have to contribute $8.8 trillion in taxes to help finance Medicare for All. She says they should be grateful because under the current system they’ll spend $9 trillion on employee health benefits.  

But she doesn’t actually know that businesses will spend $9 trillion on health care over the next decade. It’s just a guess. And not a very good one, since businesses are finding new and better ways every day to keep their health costs under control.

Her plan is to pay for healthcare by doing the following:

Even the supposed business savings are phony since Warren would massively raise corporate income taxes. In her plan, she announces that she would:

    • repeal the Trump corporate tax cuts, reinstating the 35% tax rate that made U.S companies uncompetitive among industrialized nations,
    • enforce a “country by country” minimum tax of 35%,
    • and lengthen depreciation rules.

Combined, these and other new levies would raise corporate taxes by $2.9 trillion.And this doesn’t count the following:

    • the $800 billion tax on financial transactions she’d impose
    • the $100 billion fee on “big banks”
    • a 6% wealth tax
    • much higher capital gains tax rates
    • and a requirement that taxes be paid on cap gains every year, whether or not the stocks are sold

Guess who will be paying all those costs?

People need to remember that corporations do not actually pay higher taxes–they pass those tax hikes on to the consumer in the form of higher prices. Consumers pay higher corporate taxes and higher corporate taxes drive businesses out of the country.

The article concludes:

Meanwhile, drug companies would be entirely at the mercy of whatever price caps Warren decides to impose (namely, 70% cuts for brand name drugs and 30% cuts for generics), since they’d have no other buyers.

Pharmaceutical companies that don’t play ball, she says, would risk losing their patent protection (through compulsory licensing) while the government takes over drug manufacturing. Say goodbye to the pharmaceutical industry.

In sum, Warren is peddling a health plan that, if it were actually enacted, would devastate the economy, wreck the nation’s health care, and put the government in control of just about every business decision. And she has a good chance of claiming the Democratic party’s nomination. That’s frightening.

And right now, she is one of the leading candidates for President.

What Tax Reform Can Do

President Truman is quoted as saying, “It’s amazing what you can accomplish if you do not care who gets the credit.” He also said, “You can’t get rich in politics unless you’re a crook.” We are seeing the truth in both of those observations in the current tax debate.

This is a picture of America‘s Gross Domestic Product (GDP) in recent years from the balance:

You might remember that 2012 was the year the tax increases to pay for ObamaCare began. In 2013 the Capital Gains tax increased for high income earners, and the increase in the medicare payroll tax also began in 2013. Obviously raising taxes did not help the economy.

This is the laffer curve:

As you can see, there is a point where tax increases no longer generate revenue.

I am going to assume that Democrats are going to try to block President Trump’s tax reform. I think that is rather obvious. So the question becomes, “Do Democrats not understand economic principles and economic growth (e.g. the Laffer curve) or do they simply want to enslave the American worker?” At this point it is a valid question.

I can understand high-tax states not wanting to give up the benefit they reap in the current tax code. I can also understand all the lobbyists tearing their hair out because their special interest will no longer get a tax break, but at some point Congress needs to do what is best for the country and for the American people. Economic growth is struggling under the current tax burden. Every American who works is giving the government a higher percentage of what they earn than the Medieval surfs paid their lords. That is a scary thought. At the same time, many people who choose not to work are driving expensive cars and living better than the people who do work. The poverty in America that the government is now supporting currently owns a nice car, a big-screen television, an ipad, a smart phones, and central air conditioning. I am all for helping people in time of need, but I think we have lost our way.

Congress needs to pass President Trump’s tax plan. Every Congressman who does not support the plan needs to be voted out of office as soon as possible. Unless the American voters begin to hold their representatives accountable for what they do, the swamp will never get drained. The problem is in both political parties. It is time to take note of the people whose votes help America and the people whose votes hurt America.

 

Based On Past History, There Won’t Be A Deal On Homeland Security

The Daily Signal today posted an article about President Obama’s negotiating style–he doesn’t.

The article reminds us:

Obama rejected the convention of reaching across the aisle from the very start. In his first two years in office this White House never moved an inch in the GOP’s direction and passed his major bills on stimulus and Obamacare without a single Republican vote. Those bills were written with zero input from Republicans and when asked why, he haughtily lectured “we won the election.” Then he pouts the Republicans were no help.

Obamacare could have been a really good thing–there were three or four things that could have been included which would have make it less expensive and more efficient. Unfortunately, those things were not on President Obama’s radar (insurance able to be sold across state lines, tort reform, insurance that was portable from job to job, etc.). Any one of those things probably would have brought in some Republican votes.

The article continues:

Now Republicans are learning another harsh lesson about this White House: on those rare occasions when a deal is reached, Obama routinely breaches it. Consider the recent evidence:

Death tax. One of the few bipartisan of recent years was to set the death tax at 40 percent. Now two years later, he says in his State of the Union he wants to raise taxes at death to closer to 60 percent. This would be nearly the highest tax penalty at death in the world.
Capital gains taxes. Obama entered office with these rates at 15 percent. Then he said repeatedly he would “only raise them to the rate of the Clinton years.” That was a lie from the start because the rate under Clinton was 20 percent, but he raised it to 23.8 percent including the surcharge imposed under Obamacare. Now he says he wants to raise the rate to 28 percent, which he says was the Reagan-era rate. And if he gets that he will no doubt say he only wants to raise it to the Nixon rates–of more than 36 percent.
• Taxing college savings plans. Obama said he would only raise taxes on the rich. But then he proposed taxing the build up of money in college savings plans and that would club the middle class. The plan was so unpopular, the White House dropped it, but anyone with a Roth IRA or build up in a pension plan better be on guard. You’re next.
• Budget caps. The 2011 Budget Control Act set strict caps on discretionary spending. But Obama keeps proposing piercing those caps–which he himself proposed in the first place. His new budget for 2016 wants to crash through the spending ceilings to the tune of $74 billion this year.
Paid family leave. When liberals sold the idea of parental leave back in the 1990s, they stressed over and over that this was only “unpaid” leave and so employers wouldn’t face undue costs. Now Obama and the Democrats want paid leave. Give an inch, they want a subsidized mile.
Keystone XL Pipeline. Obama first said he was holding up Keystone because of environmental concerns in Nebraska with respect to water issues. But those issues have finally been resolved by the courts. Obama is now inventing new excuses for getting to “no.”
• Immigration. Obama’s executive actions–of questionable legality–legalizing millions of illegal immigrants seems to Republicans to be intentionally designed as a poison pill for immigration reform.

At some point, Congress has to stand up against executive overreach. I hope they do it soon.

He Still Doesn’t Get It

Yahoo News posted a story today about the decline of the middle class under President Obama. The middle class has declined under the Obama Administration. If you remember, President Obama has stated in the past that he felt redistribution of wealth in America was needed. When wealth is redistributed in America, it goes from the middle class to the government. Sometimes the poor even get some. The rich know how to avoid having their wealth confiscated–it’s the rest of us that have the problem.

The article reports:

Administration officials said on Saturday the president would propose higher capital gains taxes, new fees on large financial firms, and other measures to raise $320 billion for programs and tax breaks aimed at the middle class.

Obama’s administration can take credit for stabilizing the U.S. economy, which is growing again and last year added jobs at the fastest clip since 1999.

But for the middle class the scars of the recession still run deep. Federal Reserve survey data show families in the middle fifth of the income scale now earn less and their net worth is lower than when Obama took office.

So what is the President’s solution to the fact that the middle class is not prospering–higher taxes that will impact the middle class. Most middle class families that have jobs have 401k accounts. As the baby boomers retire, they will begin tapping into these accounts. Some will be selling stock (creating capital gains), other middle class families may own rental property they invested in to finance their retirement. Selling that property creates capital gains. Their taxes will increase. That is not helping them.

The article further reports:

But the Fed’s Survey of Consumer Finances shows how uneven the distribution of that stimulus has been. Between 2010 and 2013, as recovery took hold and stock markets soared, the average net worth of families in the top 40 percent of income earners grew. For all others average net worth shrank, declining 19 percent for the middle fifth.

Similarly, the average earnings for families in the top 10 percent grew more than 9 percent from 2010 through 2013, while those at other levels stagnated or shrank. For the middle fifth, average earnings fell 4.6 percent.

Over the six years through 2013, the middle fifth’s average annual family earnings fell to $47,243 from $53,008 while their average net worth dropped to $170,066 from $236,525.

President Obama’s economic policies could easily be described as crony capitalism. They have very little to do with the free enterprise system that built the American economy. The economic stimulus that broke the budget helped companies that in many cases were owned by major Democrat donors and fund raisers. Nothing in the Obama Administration’s economic policies has actually made the American economy stronger. Further tax increase are only going to make things worse.

An Interesting Tax Plan

One of my favorite Congressmen is Representative John Campbell, a Republican from California.

Representative Campbell states on his website:

Many of you know that I am the only member of Congress with a Master’s Degree in Business Taxation (MBT). I received that degree from USC (Fight on!) in 1977. I am a CPA and once prepared tax returns for a living. At that time, I learned the Internal Revenue Code of 1954. We now have the Internal Revenue Code of 1986. I believe we may soon see the Internal Revenue Code of 2013.

But, what will that code look like? We ought to “reach for the stars” here. Let’s not just tinker with the tax code and change it a little bit. Let’s see if we can get 218 votes in the House, 60 votes in the Senate and the signature of whoever is president on a complete restructuring of the Code that would make it flatter and simpler.

This is the link to Representative Campbell’s tax proposal. After reading the proposal, there is a link to another site where you can take an opinion poll expressing your ideas on the proposal.

Here are some of the highlights of Representative Campbell’s proposal:

Eliminate all deductions except: charitable contributions, home mortgage interest and non-elective medical expenses.

Go to 2 tax rates: one for incomes below $100,000 (maybe 20% under this scenario) and a second for incomes above that (something like 28%).

Allow corporations to deduct dividends from their income, but make dividend income taxable as ordinary income with no preferences to individuals.

Eliminate any preferences for capital gains, except for non-depreciable assets held over 5 years.

Implement a minimum tax so that anyone with any income at all pays 2% of their gross income or a minimum of $100.

Please follow the link to read the details of the proposal and record your ideas.

Enhanced by Zemanta

What Really Happens When You Raise Taxes

Yesterday Ed Morrissey at Hot Air posted an article about what has happened to tax revenue in the Great Britain since the government put a 50% tax rate on wealthy residents. The new tax rate went into effect in January of this year.

The article reports on the results of the tax hike:

The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.

Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.

What did they expect? Those people who have accumulated large fortunes have also gained the knowledge of how to manage those fortunes or employ people who know how to manage them. Taxing the rich at a confiscatory rate decreases tax receipts and puts a larger tax burden on the middle class.

Mr. Morrissey points out:

Obama’s plan to hike capital-gains taxes to 20% and push a surtax on higher earnings will produce the same result here.  The capital that might have gone to work in the US will go to work somewhere else or not at all, which will not just kill the direct revenues expected in static tax analysis from the hike, but also discard the revenues that would have occurred had the capital been put to work here.  That’s the lesson from the British face-plant on surtaxes, and hopefully the US learns that lesson the easy way.

At the risk of appearing pessimistic, I can’t imagine President Obama learning from the British experience. Hopefully the next president will be able to undo some of the damage that is about to be done.

Enhanced by Zemanta