Health & Taxes II

Today is tax day; the last day you can submit your federal income tax form without the possibility of a penalty.  The late night show comedians will make their jokes and millions of Americans will complain about their taxes.  But do we really hate to pay taxes?

It turns out that the stereotype of the tax hating American is just that, a stereotype.  For example, a 2017 study found: “Americans largely play by the rules, and dutifully pay the taxes they owe. They believe in the value of government in general, and of the institutions, infrastructure, initiatives, programs, benefits and services that taxes enable government to provide. They may disagree, often passionately, and along party lines, about where tax money should go or not go. But they are not as naive as to think that there is something inherently wrong with taxation, or with the principle that taxes should be in some way graduated or progressive.”[1]

And of course there’s the reality that the majority of Americans will either get a refund or not have to pay any income tax.  The Tax Policy Center estimates that more than 44% of Americans will not pay any federal income tax this year.  This is due to having had the right amount of payroll taxes deducted throughout the year and/or due to the large number of deductions and exemptions they can take advantage of.[2]  And of course millions of Americans will be getting a refund, albeit not as large as in past years due to changes in the tax laws.

Universal health care may be accessible to all Americans, but it is not free.  We have to pay for it some way or another and every proposal is based on some type of taxation, be it a payroll tax, excise tax, or sales tax.  Each approach has its advantages and disadvantages, which I’ll examine in my next article.  However, regardless of the form of taxation, one thing is evident – Americans are currently paying for universal health care; we just don’t know it.

When you add up all the ways we pay for health care, it turns out we now pay more for health care than we would if we had universal health care.  The most obvious way we pay for health care is by contributing to the cost of employer provided health insurance.  Keep in mind that’s part of the salary you earn that is withheld to pay for health insurance (something you won’t have to do under my proposal).  You also have out-of-pocket expenses including copays and deductibles (another health care cost you won’t have under my proposal).  You and your employer also have Medicare deducted from your paycheck.  And your local, state, and federal taxes pay for the health insurance of public employees.  That’s why a tax that’s spread throughout the economy, impacting individuals and businesses alike, will cost us much less than we currently pay, while ensuring that all Americans have access to health care.

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1 thought on “Health & Taxes II”

  1. The benefit gained from taxes is often lost on most people who take for their benefits for granted without thinking who and what paid for them. Maybe a better solution would be a value-added tax rather than an income tax. By taking it out incrementally the psychological impact would be less and we could pay for things life Medicare for all without the usual legislative food fight? Make arrangements for income levels through waiving the VAT for necessary items such as food, clothing, housing, etc.

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