The House plans to tax millionaires in order to pay for the $1 Trillion needed (update: I’m hearing $1.5 Trillion now) over the next 10 years to order to pay for it.  Bloomberg reports:

House Democrats plan to fund the broadest U.S. health-care expansion in four decades by increasing taxes on the wealthiest Americans, imposing a surtax of 5.4 percent on couples with more than $1 million in income.

The legislation unveiled yesterday would place additional taxes on households with more than $350,000 a year in income and calls for further increases if the measure doesn’t hit a target for cost savings. The provisions are intended to raise $544 billion over 10 years.

You know I recognize that I’m not so great with math, but it seems as though this would still fall short.  So it looks as though this will go further down the line.  You may say, hey they can afford it!  That is probably true, but is it right?  Consider that those households that make $350,000 already have a 35% tax rate.  That’s just federal income tax.  This doesn’t include property taxes, FICA, state taxes, etc.  Most people in this bracket are looking at least 50% of their income gone to Uncle Sam before they even receive it.

Does that seem far to you?  To me it looks like government sanctioned stealing at worse, it is definitely wealth redistribution.  At the very least it punishes success as the article in Bloomberg quotes Thomas Donohue, the president of the U.S. Chamber of Commerce who issued a statement saying:

The intention of this plan is to tax high-income households, but the real victims would be America’s small business owners.  Since when does our great free-market country punish success?

Not only that, but this 1,000+ page bill also issues a mandate on coverage:

The House is also proposing a mandate on Americans above a certain income level: People would be penalized as much as 2.5 percent of their income for failure to buy health insurance. Most employers would be required to insure their employees or pay a penalty equal to as much as 8 percent of their payroll.

Just curious.  Do our lawmakers not think that this won’t have any kind of trickle down effect on the middle and lower class?  Do they not believe this will effect smaller companies hiring?

Another classic example of our government causes problems, not solves them.  If you don’t believe that, look to Tennessee’s TennCare plan back in the 1990s.  This provides a model of what could happen on the national level with ObamaCare which will, if the Democrats get their way, provided on the backs of the “rich” who also employ the most people.

Yeah, makes a lot of sense, but then again this is our government at work.  I’m just curious how many of those who will vote in favor of this mess will actually read the bill this time?

Update: The New York Post: top earners in New York are facing a 57% tax.  A majority of their money going to government.  That my wonderful readers is immoral.

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  1. Consider that those households that make $350,000 already have a 35% tax rate.

    I think that's the marginal tax rate. That means they pay 35% on that *part* of their income _above_ a certain level. The *effective tax rate* is the actual percentage paid of total income and is something much less scary.

  2. I'm not going to pretend I know all there is to know about tax law, but if this is so, what's less scary? Also in the midst of a recession is this a good idea?

  3. More evidence that the democrats do not understand the basics of economics. This will have a horrible effect on everyone financially. Businesses will fail, etc. Things like giving to charities will go down. I could go on.

    And as someone who has health problems, and needs a lot of prescriptions, I am just scared about this altogether.

    Maybe the next thing they will add to the healthcare, will be that it will cover assisted suicide. This would be cheap and take care of a lot of the people. (You know I am kidding)

    And with marijuana as a possibility in CA, they could just cover that, and keep people happy.

    Can you tell I am just annoyed altogether with all of this???

  4. The actual, effective tax percentage is smaller and less scary than the 35% marginal rate quoted. The overall progressiveness of the tax structure turns out to be much less severe than depicted using marginal tax rates and without consideration for all options that reduce tax burdens.

    As for when to raise taxes? Well, that depends on which tax bracket you're addressing.

  5. If I had to rely entirely on a private health plan, I'd be very scared if I had serious health issues, particularly if my job was uncertain. The current, market-based system leans towards weeding out high-cost individuals. The post-merger Aetna turned high-profit by eliminating millions from their rolls.

    The current system is having a horrible affect on everyone financially, except for those companies providing health care insurance. About one in six people lack insurance or are underinsured. This is a huge drain.

  6. Again, we recognize that something needs to be done (my wife is one of the uninsured by the way). It seems as though the only option that is being discussed is a public plan which will in effect nationalize our health care system, which has worked oh so well in Canada & UK.

    Why isn't anyone addressing what is driving up the cost of health care to begin with?

  7. I'd say never during a recession regardless of the tax bracket.

    Again what is smaller and less scary? Then you have FICA, State and in some places local income tax.

  8. Myself? I'd be happy to contribute greater than I do now. I could readily manage 20% more with the assurance of more comprehensive health care or one that could follow me through unemployment, disability or a new job.

    Shane, you mentioned that one of your family members could be facing health care coverage issues. What percentage of their income or savings might they burn through?

    You mention that the UK and Canada have nationalized medicine and suggest that it's a disaster. First, I don't think so. Some of our private plans may be better (if you or you employer can afford them), but on the whole, these countries do a far better job of covering their populations.

    Still, nationalization isn't even on the table. US plans lean more toward a public/private coverage hybrid like France or the Netherlands and they too seem to have quite fine systems despite paying a fraction of the cost. Better than the US.

    I'd pay extra tax for that assurance.

Comments are closed.

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