Thursday, November 19, 2009

The taxes in Reid's bill

Keith Hennessey summarizes the new taxes or tax increases that are in the Senator Reid's bill.
1. 40% excise tax on health coverage in excess of $8,500 (individuals) / $23,000 (families). Amounts are indexed for inflation by CPI-U + 1% – begins in 2013 – $149 B tax increase

2. Additional 0.5% Medicare (Hospital Insurance) tax on wages in excess of $200,000 ($250,000 for joint filers) – begins in 2013 – $54 B tax increase

3. Impose annual fee on manufacturers and importers of branded drugs – begins in 2010 – $22 B tax increase

4. Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $19 B tax increase

5. Impose annual fee on manufacturers and importers of certain medical devices – begins in 2010 – $60 B tax increase

6. Cut in half (to $500K) the amount of an executive’s compensation that a health plan can deduct from its corporate income taxes – begins in 2013 – $600 million tax increase

7. Impose 5% excise tax on cosmetic surgery and similar procedures – begins for surgery in 2010 – $6 B tax increase!

In total the bill would raise taxes by $370 B over ten years.
Great. Just the thing to do in a recession.

Hennessey goes on to comment on each provision. For example, the first provision is slightly different from Senator Baucus's proposal which taxed plans above $8,000 for individuals and now it's above $8,500. Is that enough of a change to make unions happy? Apparently so, because we know that Reid would never do anything to anger the lords and masters of the Democratic Party.

Here are Hennessey's comments on the 2nd provision which will raise payroll taxes for Medicare.
With this proposal, Senator Reid is leading Democrats across a major philosophical threshold. Since Social Security was created in the 30’s and Medicare in 1965, payroll tax revenues have been “dedicated” to financing these programs. While not all funding to finance Medicare comes from payroll taxes, all funding from the Medicare payroll tax finances Medicare. In other words, the 2.9% Hospital Insurance payroll tax that you and your employer pay on your wages is all supposed to offset Medicare spending. That is part of the social insurance model, in which everyone pays in a fraction of their wages, and everyone receives benefits later.

I am not a fan of the social insurance model, because it is non-transparent: most people think their individual taxes paid are being used to finance their benefits, when in fact the funds are used to subsidize other people’s benefits. But the social insurance model and dedicated payroll taxes have been a core principle of Social Security and Medicare financing since they were created, and advocates (especially on the Left) of those programs have fiercely defended this principle.

Leader Reid’s bill would use new Medicare payroll taxes to finance a new health entitlement outside of Medicare. His bill would turn Medicare payroll taxes into a general financing mechanism like the income tax. There is a slippery-slope argument against this that I would normally expect from the Left. If Republicans (or my former boss) had proposed this, I would expect AARP to come unglued and raise fears among seniors that, if this proposal becomes law, future Congresses might take payroll tax revenues and use them for highways or defense or other non-social insurance spending. I am interested to see how AARP reacts. Will they support the Reid bill as they did the House bill? (Reporters: There’s a story for you. Ask AARP.)
As for the taxes on branded drugs, medical devices, and health plans, those will simply be passed along to the customers. We any of us who use non-generic drugs or medical devices will be paying more for those items.

Senator McConnell comments,
— While Democrats will point to $127 billion in possible deficit reduction, that is made possible in part by delaying the benefits until the fifth year of the 10-year budget window. And even then, the $127 billion is LESS than the deficit that was already spent in October of this year. In other words, any possible savings over 10 years of this bill are already erased by the deficit spending of last month alone.
so don't be too impressed with that projection of deficit reduction from the CBO. It's all bogus anyway because it relies on Congress making cuts in Medicare spending that they've never, ever been able to make. As Yuval Levin reminds us,
And of course, the deficit neutrality calculation assumes things that will never happen (which, as usual, the CBO does its best to signal to readers of its analysis of the bill, even if it cannot say it outright.) It is based, for instance, on the bill’s claim that some key Medicare physician payments would be cut by 23% in 2011 and would not be restored—which will happen well after hell freezes over.

As the CBO carefully puts it: “The legislation would put into effect a number of procedures that might be difficult to maintain over a long period of time,” and “the long-term budgetary impact could be quite different if key provisions of the bill were ultimately changed or not fully implemented.” This is Washington-speak for “someone is holding a gun to my head.”
If Democrats like Ben Nelson and Kent Conrad who like to pride themselves on being deficit hawks buy this malarkey and pretend that this bill won't be raising the deficit, they are just being either disingenous or deceptive. And experienced legislators such as these senators aren't fooled by these sorts of games. They just think the voters will be fooled.

And remember, we have the pain now for many of these increases, but the benefits don't start until 2014.

24 comments:

Tacitus Voltaire said...

that's strange. i can't find a single tax on that list that would impact me directly

and since my insurance simply pays 100% of all necessary proceedures, i am buffered from any ultimate rise in cost of "branded drugs" or "certain medical devices"

so, according to a free market philosophy that postulates that everybody following their own good will lead to the good of all (the real adam smith, you know)

...why should i care?

tfhr said...

TV,

Congratulations!

As long as you're certain that fees imposed on manufacturers and importers of branded drugs won't pass the cost along to you or any of your loved ones, you're golden.

As long as nothing changes in your life and medical devices never become a part of it, you're golden. Same for you loved ones.

As long as you know that increases in corporate taxes will just be eaten by the corporation and not passed on to consumers, you and your loved ones have not a care in the world.

So what if raising taxes on everyone but you is of no consequence?! It's only a recession and raising taxes ought to help bring down unemployment, right?

Do you believe that Congress will gut Medicare to "achieve" these "savings" they claim? Know anybody on Medicare?

People clearly can be fooled. You're a fine example of that but you cannot fool the deficit, or are you saying that you want a larger deficit? Got kids? Explain how that won't effect their earnings and quality of life!

Maybe you don't care.

Tacitus Voltaire said...

So what if raising taxes on everyone but you is of no consequence?!

so what if some poor children getting no medical care except in the emergency room is of no consequence to you?

see - you fell for my trap!

when it comes to taxes, we should all be very upset. and - gasp! - we might even pay more, because - of course!!! - corporations need to pass those increased costs to us. why should the poor corporations be forced to sacrifice!!!

but when poor, hardworking people with children can't afford health insurance - hey, get tough! get with it buddy! if we have to make special breaks for you, we might have to pay more money, and why are you my concern anyway?

did it ever occur to you that other people's sick children might actually have a negative effect on you personally?

i'll never understand why conservatives feel corporations need such special handling, but poor hardworking people have to just deal with it

So Cal Jim said...

Forget it tfhr. TV and people of his socialist ilk are willfully blind to the realities of real world economics. They learn about how things work from the knees of teachers and professors who have plenty of pretty theories and noble notions but very little actual knowledge or wisdom.

TV cannot understand that PROFIT is the ONLY thing that drives prosperity and higher standards of living. He purposefully closes his eyes to the reality that if corporations DON'T pass their costs on to paying consumers then they will STOP supplying the goods because they'll go out of business. You can't sell $5 items for $4 indefinitely.

TV is convinced that his neighbors and fellow citizens OWE him subsidized health care. He doesn't understand that HIS health care is HIS problem and he should either arrange for it all by himself or DO WITHOUT IT. Personally, I couldn't care less if he can't afford a bottle of aspirin. I've worked hard to be able to buy my own health insurance. If he wasn't lazy or financially inept, he could pay for his own. Either way, he has NO RIGHT to demand that I or anyone else pay his way.

Bachbone said...

Was it only conservatives who bailed out the biggest banks in the USA, plus GM and Chrysler, TV? Including the very financial institutions they (Paulson and Geithner) once worked for? And created sweetheart deals for top management at Goldman and Sachs (where Paulson and Geithner had connections)? Also, who cut GM and Chrysler stockholders out of the picture (Obama even called GM stockholders "greedy" for wanting what was lawfully theirs) and forced profitable, small town dealerships employing thousands of "poor hardworking people" to lose their jobs (MI's unemployment rate is now 15.1%).

It isn't only conservatives who have corporate special interest friends, nor are all rich liberals ringing bells for The Salvation Army at Christmas or telling the NEA and AFT to stop coddling the criminals and lousy teachers in their unions so kids can get a decent education.

Even the CBO Director said in June that the Baucus Health Care Bill would leave about 30 million still uninsured, and would cost over $1 trillion. Such progress! It boggles the mind!

tfhr said...

TV,

Was that you hanging upside down in that snare? I nearly mistook you for a piƱata.

This latest scam using health care to increase government dependence actually has provisions allowing 26 year old adults to be included on their parents' health insurance plans as children. I don't think those are the children you speak of but if you wanted to help people that truly need it, TV, you don't need to trash the entire system by handing it over lock, stock, and barrel to an inefficient, politicized, bureaucracy. http://www.jsonline.com/news/statepolitics/67256287.html

The free market and the competition inherent in it is the reason we can shop for the tremendous variety of healthy and affordable food available to us in grocery stores across the 50 states. (57 for Obama supporters) Would you prefer that we switch from that to government grocery stores? You'd have to really like that government cheese, TV!

I have no special love for corporations though I recognize that they provide essential goods and services to me that I may find affordable at the moment. I also recognize that as they lose profits they shed jobs. Do those workers that lose their jobs happily explain to their children that they have to go to the emergency room instead of a GP because TV wants to "stick it to to the man"?

Maybe it makes you feel good to play Robin Hood but it doesn't do much for real health care. So much could be done to help protect people from losing coverage if they lost their jobs. Health Savings Accounts would be there even if your job was not. You would not be tethered to a bad job just to keep benefits. Small businesses could pool their employees for better rates and coverage. Catastrophic health insurance could be available to people at affordable rates simply by putting an end to government restrictions that prohibit competition across state lines. So much of the high cost we endure exists because government has intervened too much already. Your Robin Hood doesn't just rob the rich to redistribute their wealth, he also robs the poor because those people with the least maneuver room in their budgets will get socked the worst as consumer goods and services rise in price to cover Robin's demands. A penny here and a nickle there to keep those corporations solvent may not seem like much to you yet but wait until you're on a fixed income.

These measures I've suggested could help a lot of people without adding an additional burden to a struggling economy and without jacking up taxes.

For a politician it is easier to raise taxes on a faceless corporation than a voting demographic. Corporations can be soothed in other ways when it comes down to getting their contributions for the next campaign. People - not so easy. I cannot imagine that you don't have the objectivity to see that but then if you don't realize that corporations don't pay those taxes without passing the cost along to all of us, then maybe you can't see it. Maybe that's why you stepped in your own trap. You look funny swinging back and forth like that.

As long as you're not going anywhere, why not come up with a concrete number of how many children there are that do not have adequate health care? Present that figure and then explain why it is necessary to force over three hundred million people into a government run program that shares the simplicity of the IRS and the compassion of the Post Office, if your goal is to provide health care for children that have no means of obtaining it.

I'll come back and check the trap but no fair gnawing your leg off to get the answer.

Ron K said...

"so what if some poor children getting no medical care except in the emergency room is of no consequence to you?"

Damn TV you're so smart, oh did you forget SCHIP, what about medicaid.

Pat Patterson said...

Hasn't TV at various times claimed that he made over $250K but somehow a now surcharge on incomes over $200K doesn't affect him?

Tacitus Voltaire said...

briefly, conservatives are highly diligent in tracing the possible negative effects on that delicate, easily scared child that is their picture of economic activity, while all the time all of the rest of the actual humans in the society that they live in are dark shadows who never affect them in any way and are none of their concern

this view of the universe is unlikely to lead to wise choices or clear predictions

i'll try to get back to you in more detail if i have some time later...

Tacitus Voltaire said...

Hasn't TV at various times claimed that he made over $250K but somehow a now surcharge on incomes over $200K doesn't affect him?

indeed, me and the wife filing jointly will probably be breaking the $250k mark at the time that goes into effect. yet, somehow i am not quailing in fear at the .5% increase.

TV cannot understand that PROFIT is the ONLY thing that drives prosperity and higher standards of living.

i tend to think that insurance companies and the suppliers of expensive medical equipment will still be able to make a handsome profit after these new taxes, thank you very much. but i'm sure they'll appreciate your tender concern for their welfare


TV is convinced that his neighbors and fellow citizens OWE him subsidized health care

uh, no. actually, through no virtue of my own, i have unbelievably good health insurance

what i am convinced of is that any country that fails to do everything that it can to see that every child within its borders gets the best education and health care possible is cutting its own throat

Do those workers that lose their jobs happily explain to their children that they have to go to the emergency room instead of a GP because TV wants to "stick it to to the man"?

yeah, maybe somebody who has been creating software products for 25 years and is trying to start his own business is a teenage hippie from 1968

These measures I've suggested could help a lot of people without adding an additional burden to a struggling economy and without jacking up taxes

i happy to see that you are thinking about how to help people. unfortunately, your party failed to listen to any of your suggestions and neglected a huge problem which has degraded the quality of life in this nation for too long. i am sure, though, that our economy has strong fundamentals (no snark) and will manage to survive this restructuring. it seems to have been damaged much more by credit bubbles on wall street that it ever has been by taxes increases, eh?

why it is necessary to force over three hundred million people into a government run program that shares the simplicity of the IRS and the compassion of the Post Office

geez, what hyperventilating! first of all, nobody currently with health insurance is going to be forced to do anything at all, much less the entire 300 million plus americans. what in god's name to do you think you mean by that, anyway? you don't seem to have any idea of what's in the bill! the only "government run program" in the bill(s) is a government subsidized health insurance company that might (might!) be established to provide cheaper insurance if private companies are still to expensive. if you take the time to actually find out what health insurance reform is about, which, apparantly you have not, that would be clear

secondly, despite what conservatives continually affirm as an article of faith, government workers are not required to take a vow of inefficiency and callousness. have you ever tried to call microsoft? i suppose you think that all corporations are wonderfully efficient and compassionate!

p.s. again, please take the time to find out what is in the bills before congress, so that we can discuss this coherently

Pat Patterson said...

Back tracking much? "Tacitus Voltaire said...
that's strange. i can't find a single tax on that list that would impact me directly..."

Plus if the company one gets his insurance gratis through can't claim it as a deduction then that money will come out of the hide of those self-satisfied caring professionals.

tfhr said...

TV: EPIC FAIL

This jumps up right away:

"i tend to think that insurance companies and the suppliers of expensive medical equipment will still be able to make a handsome profit after these new taxes, thank you very much."

Well that's great, TV, but don't you think they'll pass that tax along to consumers? Who do we get to pass the cost to? Price increases made to compensate higher corporate tax rates is a tax on EVERYONE.

When I asked what happens to the families of workers laid off by corporations you came up with this:

"yeah, maybe somebody who has been creating software products for 25 years and is trying to start his own business is a teenage hippie from 1968

That's a non-answer and I judge that you were incapable of delivering an effective response. Your inability to recognize that the employees of corporations work to make a living and that their families depend on the success of corporations shows a lack of objectivity and quite possibly a blinding unfamiliarity with life in the real world. Do you live such a sheltered life? I used to live in Dayton, Ohio, a city that once considered GM to be one of it's most important employers. When GM started closing plants, how do you think those GM workers felt? I can tell you they felt like the NCR employees felt when the National Cash Register Corporation crashed and burned in Dayton. Yeah, just pile the taxes onto the corporations, it won't hurt anyone!

Then there is this failed assumption:

"unfortunately, your party....

I'm "unaffiliated" according to the state of Maryland. I don't toe or tow a party line. You should try it. Maybe if you could free your mind for a moment and diverge from the Dem party line and talking points you could see that the suggestions I've offered for considerations could help. Tell me why they wouldn't!

And by the way, those credit bubbles on Wall Street had some help from members of Congress, so why on earth would you trust the same Parliament of Whores (as per PJ O'Rourke) to provide medical care? Common sense, TV!

You are characteristically short-sighted here with this:

"...nobody currently with health insurance is going to be forced to do anything at all"

Please give us your guarantee that employers will not dump their current insurance programs and tell their employees to go get their own. Wouldn't it be cheaper for the employer's bottom line to let the government subsidize the health care for their employees? Do you suppose all the employees will be happy with losing their plans provided by the employer in favor of government health care? As we've seen already, you're given to making assumptions but you should really think this one through.

I'll call your Microsoft example and raise you a Veteran's Administration. Which one is most germane to the topic of government health care Mr. Software designer? At least with software, I could take my business to a hippie with 25 years of experience, if I felt so inclined.

What is in the bill? You said I had not taken the time out to know what is in the bill. Have you read it ALL? No you have not. That's just part of the problem. You and I both know you've not read it all yet and neither have the members of Congress that are getting ready to saddle us with this mess. That alone should tell you that voting for a notion of Utopian ideals is one thing and actually understanding the details and UNINTENDED consequences of a poorly conceived power grab camouflaged as health care "reform" is something entirely different.

Tacitus Voltaire said...

Well that's great, TV, but don't you think they'll pass that tax along to consumers? Who do we get to pass the cost to? Price increases made to compensate higher corporate tax rates is a tax on EVERYONE.

apparantly the end of the world, even though poor children might be finally able to get proper health care because of it. member of society fail.

Your inability to recognize that the employees of corporations work to make a living and that their families depend on the success of corporations shows a lack of objectivity and quite possibly a blinding unfamiliarity with life in the real world. Do you live such a sheltered life?

ahem. my point is that i have been making - creating - commerical products for corporations for 25 years as my way of making a living, and therefore am more intimately familiar with and possibly even more sympathetic to private enterprises than somebody who has spent their professional live writing "analyses" as a government employee. get it?

Please give us your guarantee that employers will not dump their current insurance programs and tell their employees to go get their own. Wouldn't it be cheaper for the employer's bottom line to let the government subsidize the health care for their employees? Do you suppose all the employees will be happy with losing their plans provided by the employer in favor of government health care?

highly suppostitious, and further evidence that you don't know what's in the bill. for example, there is nothing that could be possibly be described as "government health care" in either bill.

PLEASE READ UP ON WHAT IS IN THE LEGISLATION

At least with software, I could take my business

so what operating system are you using on your laptop?
.

Tacitus Voltaire said...

Do you suppose all the employees will be happy with losing their plans provided by the employer in favor of government health care?

sigh

here is a summary of the fundamental parts of the health insurance reform bills

private insurers:

- are required to accept all applicants,
- may not charge higher premiums because a person becomes ill,
- prohibits the use of pre-existing conditions to limit or disallow coverage, and
- children may remain on parents'insurance through age 26.
- No lifetime caps on coverage expenditures.


All Americans will be required to obtain some form of healthcare insurance coverage

(this provision has already been put in place by all other countries in the developed world)

Subsidies to help pay for the costs of government plans will be given on a sliding scale to individuals and families with annual incomes between 133% to 400% of poverty level. Those earning less than 133% are eligible for Medicaid coverage.

Penalties of up to $750 per adult, under the Senate plan, would be assessed for failure to purchase insurance coverage. The House plan charges much higher penalties, as high as 2.5% of annual income.


in addition, there is a strong push, still very controversial and not at in a final form or certain to pass, for a "public option", that is, a federally subsidised health insurance company offering cheaper premiums than private companies. strangely enough, the senate bill as announced a couple of days ago proposes higher (!!!) rates for this entity!

as far as companies "dumping" their employees off of plans, the house plan include strong penalties for companies that do NOT provide insurance for their employees:

most fiscal aspects of the Senate health care reform plan differ considerably from the House plan, including in funding sources for reform legislation, decreased employer penalties for not offering health insurance to employees, and decreased taxpayer penalties for not obtaining mandated coverage.

a Medicare-like public plan


[please note that medicare is an insurance plan, not a health care provider like the VA. government subsidized insurance is not government provided health care]

will offer four levels of care to all U.S. citizens and legal residents to choose from, without regard to pre-existing medical conditions: basic, enhanced, premium and premium-plus. The four government plan levels are differentiated mainly by costs covered by the public plan, rather than the participant, and range from 60% to 90% of costs.

Under the Senate bill, states may opt-out of allowing the public plan to be provided to their residents. Illegal immigrants are not covered by either the Senate or House health care refrom bill.

The public plan will be offered along with a myriad of private plans via a state-based insurance exchange. For the first few years, only small businesses, the uninsured, and self-employed persons may purchase policies from the exchange.

In contrast to the House bill, employers will be strongly encouraged, but not required, to provide health insurance coverage for employees. If coverage is not provided, businesses will be assessed a flat fee per employee who buys insurance via the exchange.

tfhr said...

TV,

In your responses you've used my words in italics but also the words of others in italics. Can you please at least cite your source(s) for the italicized entries that are not mine?

Do that and I promise you a response worthy of your effort.

As for the laptop question: One runs Linux and two run MS products. Still new to Linux but I find that is runs on my oldest laptop much better than XP did. Still waiting to see how MS 7 performs before I decide to replace this desktop with another Sony or move over to Mac, as some of my (extended)family members have over the past couple of years (the Vista era).

Tacitus Voltaire said...

[tfhr]In your responses you've used my words in italics but also the words of others in italics.

i'll take more care with that in the future

also, i apoligize for the heat in some of my responses, although i really don't mind anything aimed back at myself. passionate debate can be like that

tfhr said...

TV,

Fire away, just let me know where you're getting this material.

Pat Patterson said...

Small wonder that TV did not identify his source as the writer's, Deborah White, has the kind of credentials that make a propagandist look bad. But her opinion piece in About.com is ricocheting around the left as if it is in any way factual rather than opinion by someone who worked for both the California Democratic Party and also the reelection campaigns of Speaker Pelosi. She, like TV also does not provide citation or pagination for the article.

http://tinyurl.com/yftmg5k

tfhr said...

Pat Patterson,

Why am I not surprised?

When the voting for this scandalous government takeover of our medical system and 1/6th of the economy for the low, low price of $2.5 TRILLION conveniently happens on Saturday nights and must be done without anything resembling a thorough examination of the House or Senate bills, it would follow that an advocate such as TV, would not want to disclose his "source".

Ironically, TV has observed in another thread (where we discuss European socialism and the Marshall Plan) that human undertakings may have UNINTENDED consequences but he cannot see that Obamacare is fraught with measures that will have dangerous repercussions for health care, the economy and the budget. None so blind....

tfhr said...

Forgot to ask if these taxes include the Harry Reid "fee for services rendered" by Mary Landrieu? That's a $300 million dollar bill for the tax payers foot so Harry could have a hot time with Mary last Saturday night.

Got to find my tattered copy of PJ O'Rourke's Parliament of Whores. O'Rourke could add another chapter or even an entirely new book with the materials provided by this Congress and it's pay-offs.

Tacitus Voltaire said...

uh, guys - it is as if you never heard of searching on the internet or this great web site called "google"

it is really easy to use! if you took ten minutes to do a little searching, you would find quite a few web sites giving you similar summaries of what is in the health care bill

i must say, a military analyst and a high school teacher acting as if they were utterly unable to do ten minutes worth of due diligence to find out what is in this very important legislation - well, it's not an edifying sight. pretending that the contents of the bill is an unknowable secret is really silly

let me repeat that for emphasis: pretending that you can't find out the contents of this bill is really silly
.

Pat Patterson said...

Then provide those summaries with I hope better provenance then the one you quoted so freely but provided no identity of or link to.

tfhr said...

TV,

Let's hear about the part where Americans can be fined and jailed for not literally buying into Obamacare. Are you going to tell me that isn't there? Google that and get back to me. You can use the keyword "unconstitutional", if you need help.

I also seem to recall that you said you had health insurance. Does your current plan take 2,074 pages to explain? Why not?

Tacitus Voltaire said...

Let's hear about the part where Americans can be fined and jailed for not literally buying into Obamacare. Are you going to tell me that isn't there?

fined, yes, but not jailed. everybody has to have health insurance

Does your current plan take 2,074 pages to explain? Why not?

try getting into a dispute with your insurer over some point. then you'll find out how many pages of details you signed up for

um, major legislation does tend to have lots of pages, yes. i guess this is a big surprise to you
.