Tax Analysts Blog

More Something for More Nothing

Posted on Nov 17, 2009

Senate Majority Leader Harry Reid is considering a Medicare tax hike to help pay for health care reform. More specifically, he wants to raise taxes on rich workers to subsidize health care for the rest of us. And Americans love the idea (at least in general terms).

Of course they do. Doesn't everyone want something for nothing?

Reid's tax hike, like so many others tossed around by Democrats this year, has been sadly distorted by Obama's ridiculous pledge to avoid tax hikes on everyone making less than $250,000. The longer this pledge remains an element of Democratic dogma, the more onerous and objectionable it becomes. Not only has it warped the funding debate over health care -- which, as a major spending program with entitlement features, should be transparently funded by everyone, not just the fortunate few -- but it has also distorted larger debates about tax reform.

The health care debate was always going to come down to a tax debate. Sure, others elements of the plan are controversial, especially the "public option" and its variants. But at the end of the day, this legislation is about expanding coverage and finding some way to pay for it. That's a tax debate, and it has turned out to be just a predictable and dysfunctional as every other tax debate in recent memory.

Ezra Klein, channeling Bruce Bartlett, has suggested that Republicans unhappy with soak-the-rich tax provisions in the health legislation have only themselves to blame. If they'd been willing to engage the health debate like grown-ups, then they might have made room for a better set of funding options. They might, for instance, have been able to save the excise tax on employer-provided insurance. (Not that it needs saving quite yet, but it seems more than likely in the weeks ahead.)

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