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Tax the wealthy, keep everyone healthy

Robert Reich

TEXT OF COMMENTARY

Kai Ryssdal: President Obama took to the bully pulpit today. He gave Congress a pat on the back for the work it's done so far on health care. Then he pushed lawmakers to hustle and get a final bill done before the August recess. Whatever it does wind up looking like, health care reform will come at a high initial cost. The plan the House released yesterday tops a trillion dollars. To help pay for comprehensive coverage, House Democrats want to raise taxes on the wealthy. Commentator Robert Reich says that's a small price to pay.


ROBERT REICH: It's the most blatant form of Robin Hood economics ever proposed. The House of Representatives' universal health care bill, announced yesterday, pays for the health insurance of the poorest 20 percent of Americans who need help affording it with a tax surcharge on the richest 1 percent.

I don't remember a redistribution this direct ever coming out of Congress. I mean, occasionally Congress closes a few tax loopholes at the top and offers a refundable tax credit to people near the bottom. Or creates a poor people's program like Medicaid, paid for out of general revenues from a progressive income tax. But to say out loud that those in our society who can most easily afford it should pay for health insurance of those who cannot is, well, audacious.

There's another word for it: fair. According to the most recent data, the richest 1 percent of American households now take home about 20 percent of total income, the highest percentage since 1928. Now, yes, I know, critics will charge that these are the very people who invest, innovate, and hire, and thereby keep the economy going. So raising their taxes will burden the economy and thereby hurt everyone, including those who are supposed to be helped.

But there's no reason to suppose that taking a tiny sliver of the incomes of the top 1 percent will reduce all that much of their ardor to invest, innovate and hire in the future. Yet if this tiny sliver means affordable health care for a far larger number of Americans, they'll be able to get regular checkups and thereby stay healthy and productive. And a more healthy and productive workforce will do far more to build the American economy.

One other virtue of this funding mechanism is its simplicity. A surtax is simple to administer. And the whole idea is easily understood. Tax the very wealthy to keep everyone healthy. Not even a bad bumper sticker.

RYSSDAL: Robert Reich is a professor of public policy at the University of California, Berkeley.

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I READ ONE PERSON'S COMMENT HERE THAT STATED " Can't you people see that once our society embraces this mentality, nothing you value is safe from it? It will feed and grow until we are stealing the last crumbs of bread from each other." This is a common theme among the rich, the conservative and the religious fanatics. So what do we call the public school system? is it not similar in the fact that ALL taxpayers foot the bill for educating our children. The wealthy have to pay even if their children attend a private school in some other town. Reasonable people understand that it's in the best interest of society to educate all children. Not just the rich. Then why shouldn't we provide healthcare to all people. Is it not in the best interest of society. While I'm on my soapbox allow me to give my opinion on one of the reasons why the wealthy (not the ultra-rich as they can afford anything) are against health care reform. In the present system the wealthy can use their health care insurance and get excellent service at all the same medical facilities that we all use. How much does this cost the wealthy? It cost them whatever the plan they happen to fall under. Which is a hell of a lot cheaper than if they had to pay 100% of all cost out of their own pocket. And still the insurance companies and hospitals post huge profits. Everybody should be forced to help pay for healthcare. Just like our public school system. If the rich want to go to some private doctor then let them. But they have to pay their share and maybe a little more whether they use the public system or not. Healthcare for everyone!

I can't say much more on this subject then everyone else has but I think Mr. Reich really should read Atlas Shrugged. He seems just thrilled to Loot the industrious to curry favor with the indolent creating a vast underclass of dependency that the government can exploit. I teach my children to be hard working and thrifty and that will lead to success. Mr. Reich teaches the lazy and stupid that they don't need to work hard. They just need to steal. Shame on you Robert!!! Hopefully your Marxist comments will be seen for what they are: An advocation of theft and not a noble achievement.

Instead of taxing the wealthy, why not tax the purveyors of poor health: the fast food and tobacco companies along with their consumers? What could be more fair than that?

Mr. Reich, it is fine to advocate an increase in taxes on the wealthy. We can argue forever whether increased tax rates help or hurt the country and the economy. It is fine to advocate a public health policy for everyone. We can argue whether the government will handle our health care as efficiently or as cheaply as the private sector. We can even argue about whether the new policy will provide better care than our maligned VA system or Medicare/Medicaid. But to imply that you can pay for a program that the GAO estimates may cost as much as a TRILLION DOLLARS with a tax surcharge on the top 1% of the taxpayers is disingenuous at best or purposely manipulative at worst. You are pretending that a massive expansion of a federal entitlement program can be paid without feeling real pain. Something for nothing. Instead, we are just as likely to end up with nearly nothing for a very large something.

It is clear that severe tax increases have or will be taking place in the US on both state and federal level. It is also clear that tax increases have a multiplier effect on GDP contraction (one dollar tax increase will translate roughly into 3 dollars drop in GDP.) There is of course a delay before the tax shock translates into GDP contraction. It is entirely possible that with the temporary impact of stimulus, we may be looking at a prolonged "W" type recovery that is far more protracted than many currently estimate.

http://www.SoberLook.com

Here are some numbers on who pays how much taxes and who makes how much:

http://www.taxfoundation.org/news/show/250.html

As will be seen in these numbers, the top 1% earns about 22% of the income and pays about 40% of the taxes. The bottom 50% pays about 3% on about 12% of the income. That sounds fairly progressive to me.

My income, by the way, is an unemployment check of about $400/week.

I'm concerned that Mr. Reich, who is, usually, pretty respectable for a liberal and whose ideas I usually listen to, despite our different places on the political spectrum, sounded much too gleeful for my taste as he proposed this bit of asset confiscation, as though he just wants to take from the rich on general principles, regardless of whether there is a logical basis.

I don't doubt that the wealthy have disproportionate influence and game the system to redistribute income upward, but all that Reich argued for was a redefinition of what is "fair", which is in the eye of the beholder. Class envy is an easy sale in hard times and it doesn't require much intellectual wattage. I'd like to hear something a little more substantial before confiscating the property of those whose only "offense" may be having what is judged to be too much of it. THAT could become quite the slippery slope that many of us who expect to be excluded could find ourselves sliding down. The "progressive" appetite for revenue is considerable and, usually, the middle class must chip in because there aren't enough rich to soak.

Everyone should pay their own fair share. Whether a flat or graduated tax, all should pay. Whether you had income of $1000 or $10 million, pay your part. We'll soon have a majority that pays no taxes mandating services to be provided by a minority of tax payers. Then you'll see some real tea parties and some true revolt.

There is nothing fair about this. My husband started a small business in 1995. We have scrimped and boot strapped the business. After a decade of sacrifice, the last few years we have seen the business income put us in the over $350000 tax bracket. That sounds like a lot of money, but you must realize much of it is tied up in the business and is inventory and other assets, not cash in hand. The comments on this page make it sound like everyone at this income level is a fat cat, private school, cigar smoking greedy person that deserves to have their hard earned income taxed above and beyond the 35% we already pay. Tax loopholes? Hah! My family lives in a modest 1700 square foot 1950’s ranch style home. We do not use any more (probably fewer) government services than other families, but because we’ve built something and finally succeeded we are expected to pay proportionally far more than all other Americans. As much as I admire President Obama, he cannot guarantee that any federally run program will be efficient and not go broke sooner or later. So what happens when the federal health plan runs out of money like so many of the state plans have? Tax the “wealthy” some more? There has to be a more sustainable way to provide basic health care to all but not on the backs and success of 1.2% of the entire population. It is neither fair nor a feasible long term solution. Oh, but I forgot we need a solution to a trillion dollar problem by August. So, instead of a well thought out plan that would create a private sector and competitive (capitalist) markets to serve this need, let’s just tax the wealthy and go with a socialist model for health care.

The societal benefit that would be derived with universal health care would far outweigh the cost to the rich of having to pay a little more in taxes. The rich have had a thirty year tax holiday and its now time to pay their fair share. As Warren Buffet has said, sure its class warfare and so far I'm winning. Finally, if we have a healthy population with preventive care, the cost to society will be cheaper health care in the long run. Remember taxes are the cost for a civilized society. To those who have gained much from our society a little is needed to restore some semblance of balance. Reich is on the money. Neocons are selfish, mean spirited and equate poor with being lazy.

Socialism has NEVER worked and it likely never will. It does not incentivize people to work or to be wealthy. After all, somebody has to pay the bills. The rich cease to be rich when you take all their money.

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