Tax the wealthy, keep everyone healthy
The big debate over health care reform is how to pay for it. The latest proposal comes at a very high price -- more than $1 trillion. To help pay for it, House Democrats want to tax the wealthy. Commentator Robert Reich says that's a good idea.
Robert Reich (Robert Reich)
More on Taxes, Commentaries, Commentary - Robert Reich, Health, 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.
Comments
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From FORESTDALE, MA, 08/16/2009
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!
From Elmwood, IL, 07/24/2009
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.
From Schaumburg, IL, 07/23/2009
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?
From Houston, TX, 07/17/2009
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.
From NY, 07/17/2009
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
From Renton, WA, 07/16/2009
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.
From Nashville, TN, 07/16/2009
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.
From Nashville, TN, 07/16/2009
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.
From minneapolis, MN, 07/16/2009
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.
From Flagstaff, AZ, 07/16/2009
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.
07/16/2009
$250k and up is rich period.
the only problem with taxing the Bentley health care plans of the rich (so that we can have a toyota health care plan for ones without) is that the rich will just find a way not to pay taxes for it.
07/16/2009
Reich is a typical liberal. He gives charity out of other people's pockets. Forced charity is theft, nothing less. Once this crazy bill passes, the Republicans will get in, in 2 years. They will not remove the entitlement as they never do, but instead will shift the tax to the middle class. so in the end and in future generations, the avg American will get stuck with this huge bill that will eventually devalue the dollar to the point where it will be retired as the international currency. this will in turn dramatically decrease the American standard of living.
From Sacramento, CA, 07/16/2009
While in principle I agree that those of us with the most should help those with the least – isn’t that why we band together as a society, to protect, support and help each other? I differ on one important point. Not economically savvy, nor educated in finance, I fail to understand why those who are continue to equate health care with health insurance, and seem to use those terms interchangeably. It seems to me that the high cost of health care is due at least in part to the extra layer we have added: supporting huge profits for the insurance companies and in turn fund their huge lobbying budgets. So while I fully support providing health care to all who need it, I can’t support the current scheme of ‘health insurance’ for all.
From Atlanta, GA, 07/16/2009
So, your neighbor has a bicycle, but his job is 30 miles away. You have a car. Your job is a block away. So the neighbor comes over and takes the car; he NEEDS it more than you do. Forget calling the law--sure, you worked hard to earn the money to purchase the car, but you don't really need it. The government says it's only FAIR for your neighbor to have it, due to his NEED. 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.
From St. Louis, MO, 07/16/2009
Anyone who believes Mr Reich does not have Marxist leanings only needs to read his "The Work of Nations" and that should disabuse him of any other opinion.
What is "fair"? How about a flat tax? Same percentage rate for all, regardless of total income and with absolutely no deductions. Whatever the government programs for the good of the populace require - be it 10%, 20%, 40%, etc. Only then will everyone have "skin in the game" when it comes to the electorate and their representatives' willingness to push through massive programs for which a minority of earners are expected to foot the bill. As long as there is an increasing attempt to build a society dependent upon government programs with no personal requirement for all to participate in solutions to our problems, we are full steam ahead for the scenario of "Atlas Shrufgged."
From Minneapolis, MN, 07/16/2009
I almost choked when I heard Robert Reich say that the most wealthy should be taxed more to pay for health insurance. You've got be kidding me. Perhaps he should get out of his ivory tower, start a business or work for one and then address the health care issue. And if he is into wealth redistribution, I'd be glad to "share" some of his wealth as I'm fairly certain he makes more money than I. Let me know when he needs my address to start "sharing".
From New Haven, CT, 07/16/2009
The "tiny sliver" advocated by Mr. Reich is on top of tax burdens that will soon reach 40 or even 50% of income for the rich if one combines federal, state and FICA taxes. Some redistribution is fair, but we are already beyond that point. The rich will surely try to bypass Sherwood forest if they can help it at all.
From Avon, CT, 07/16/2009
What a great idea for fixing health care "from each according to his ability, to each according to his need," on second thought I think Karl Marx beat you by about 130 years. Mr. Reich has gone off the deep end on this one. I'm not saying the current health care situation doesn't need help, but I am saying this isn't it.
From Seattle, WA, 07/16/2009
Reich: "taking tiny slivers"
And where does it all end Mr. Reich! Tiny sliver here, tiny sliver there, all in the name of fairness. At least you're honest -- your wild support for redistribution at the expense of the productive sectors of the economy is certainly evident. But what will you do once you've strangled the economy?
Your brand of Marxism/collectivism has never been a viable system in the past -- why do you believe it will work now!
From SF, CA, 07/16/2009
I completely disagree with Mr. Reich. It's a cop-out to suggest that such an important and valuable program should be funded by a disproportionately small percentage of the country. His representation is also factually inaccurate, since the current proposal has the largest burden being placed on household incomes (joint) over 1 million, but also levies lesser additional taxes on household making a joint income of 350K or more. That proposal suggests it's taxing the top 5% of income earners. That is not the same as taxing "the rich". You can raise taxes on the 20% highest income earners and still argue that you are taxing the richest people. Many people who fall into the 350K-500K joint income ranges live in high-cost urban areas where that income amount does not make them "rich" by standards of remaining disposable income after paying the highest prices for housing, education, transportation, property, state, sales and local taxes compared to most places in the country.
The fact is, that any worthy program should be funded by ALL taxpayers using the existing regressive system, which is inherently "fair". You pay proportionately to what you bring in. To suggest that 5% (or any significant minority) of the country should be paying for something that everyone "needs" is absurd and irresponsible. If the only way they can get a program approved is to tell 95% of the country they don't have to pay into it, then it's probably not a worthy program. Similarly, if it is worthy of being created, most people would be willing to pitch in their share and would support it.
Additionally, any new public healthcare system must completely replace the existing government program which currently covers government employees, and all government employees should have to use it instead of the one they currently have.
From Bangkok, 07/16/2009
Oh to be wealthy enough that $33,000 a year was just a "tiny sliver" of my income
From houston, TX, 07/15/2009
I am tired of people who think that everyone that is poor doesn't work or isn't willing to work. Yes, some people take advantage of the system. However, a lot of people are born into circumstances that are extremely difficult to escape from and/or in rural areas without opportunity (and it's not that easy to just move when you have no money, access to transportation or education). I know a lot of people pull themselves up by their bootstraps and succeed anyway. But, most of the people I hear expressing the attitude that "poor people don't want to work" are the people that had opportunities themselves and mommy and daddy paying for college, or they had special talents or scholarships. Not everyone has that. (By the way, a lot of poor people work their asses off for low wages and still can't afford health insurance). It always amazes me that people that are given so much are so selfish and want to give back so little.
From Chicago, IL, 07/15/2009
I am not rich, but I do not believe that the rich should be paying for anyone's health care. Why? I heard the comments that if the very poor were healthy, they would helping with the workforce and things would get better. Good luck. I would like to see the poor who is used to getting a check and living off everyone else go and get up at the crack of dawn to go and work. Are these politicians that naive or do they think that the American public is that stupid? I am personally sick and tired of seeing deadbeats that do not want to work getting all of the services and squeezing the middle class and upper classes so that they can have a free ride.
From BC, 07/15/2009
Disclaimer: I am Canadian so am in favour of health care for all - see it as a right for everyone to get medical care.
I am a wealthy Canadian and don't mind paying for the poor to have health care. First, everyone deserves it. Second, people often don't choose their circumstances (who their parents are for example). Third, I grew up poor and if I had been raised in the US or Britain, I would not have been treated - and therefore not alive now to pay back to my country.
When I lived in California, I was amazed at how much we had to pay out of our pocket for property taxes, health insurance, etc. Most of these things come out of my income taxes in Canada so yes, I pay a lot of taxes - but take home about the same amount as when I lived in the US. And my health care is excellent here - it probably helps that I'm a professor of medicine but still, my friends and family have also had good care.
It seems to be the attitude - whether you believe that people can control illness and/or life circumstances.
From ME, 07/15/2009
i agree with both robert reich and lj r, concerning their opinions regarding funding health care insurance. i did go to the trouble of reading many of the posts to confirm lj 's observation of the gordon gekko mindset in early 21st century america.
the arguments from the right concerning health care reform and their hollering of the wealthy regarding their funding it reminds me of an article i read in the nyt soon oafter last fall's election. a dentist was claiming to cut back on his current gross income of 450K to earn less than the 250K ceiling of the new "obama tax" on the rich. he was claiming that he was willing to lose 200K in income to avoid paying about $6000 in additional taxes. tell me again why folks like this need extra money if their addition and subtraction is so faulty that they would willingly lost 194K in income to prove a point. a story about a nose and a face comes to mind.
From Oak Harbor, WA, 07/15/2009
Perhaps a balance could be struck. Tax the wealthy to help provide health care to those who can not afford it. Those who can not afford health care on their own have to comply with certain health requirements set by their doctor (quit smoking, stay off drugs, exercise, eat right, work towards and maintain a healthy weight, etc.) in order to receive the subsidized health care. When a person gets sick it can affect a lot of people. Disease spreads irregardless of income. Some diseases, if not discovered and treated in time can mutate and become even more harmful, possibly deadly. Where better to incubate a very nasty bug than in a host body that can not afford treatment? America was once the envy of the world because of the beliefs and ideals of it's people, for it's people, by it's people. America's health care problem has to be solved by it's wealthy people and it's poor people - by it's American people.
From CA, 07/15/2009
Clearly folks commenting here are not healthcare providers. Assuming that if you take good care of yourself, you'll never get sick and need healthcare is sheer ignorance.
Reality is that the wealthy get all hot and bothered about this kind of thing because MOST wealthy people are selfish and self-centered. I said MOST; not all. Sorry folks but you who are making over a Mil a year are wealthy and from the comments here, I can see that sure enough - the selfishness and self-centeredness is very clear.
Lastly, the same ignorance exhibited in comments here by objectors to Robert Reich's analysis (and by the way, do they have a Ph.D. in Economics and are they teaching at Cal? Don't see any Ph.D's in those authorships so... uh... I'd rather go with the Ph.D's analysis) - seems to extend to the idea that someone else's poor health doesn't affect other people. Again, try that on your own healthcare provider. More ignorance - yes, it very much does. Let's go with the EASY examples like Swine Flu, lack of vaccinations, and then there's the guy you refuse to pay decent wages to for your lawn work - this guy does not make enough from your cheap pay to him to afford both health insurance and food for his children and spouse.
Unfortunately, no law will eradicate the most dangerous disease in America - rampant selfishness, self-centeredness, grandiosity, and egotism - interestingly, the very same characteristics of children.
Robert Reich - You speak for me/AMEN re this analysis of his. AMEN!!!!!!!!!!!
From NY, 07/15/2009
Yes, tax the rich to balance everything out. Most of the richest people in this country care about no one but themselves. The creed of Gordon Gekko is alive and well. They don't care about the average wage earner because THEY DON'T SEE THEM. Out of sight, out of mind. They've constructed their lives this way. The reason the government has to do this? The rich aren't doing it on their own. They have lost all sense of morals and values, and don't care about other people.
From Sandy, UT, 07/15/2009
I flatly disagree with Mr. Reich for a variety of reasons. First, health insurance is very different than car insurance in a variety relevant ways: 1. Car accidents can affect other people besides yourself. If you get sick, and have chosen to go without insurance only you are affected. 2. Car insurance laws are a state by state issue and not one mandated by the federal government 3. Rich people do not pay a surcharge so that poor people can have health insurance.
When Mr. Reich suggests that it is "fair" for the rich to pay for the health insurance of the poor, I wonder what he means. Is it fair for a person who has excercised constantly, eaten healthy foods, not smoked, not done drugs to pay for someone who has flouted all of those same standards? This whole proposal totally takes personal responsibility out of the equation and will consequently entitle the lazy and irresponsible far more often than the truly unfortunate.
From bethesda, MD, 07/15/2009
i disagree with r. reich...taxing the rich to pay for bebefits for the poor is the same as expecting the one successful sibling who worked hard and made responsible choices in the family to be responsible for supporting the others who were more short sighted. how can people expect to be motivated to work hard when half their earnings go to ill-used and wasted taxes and lazy people who act entitled and expect everything to be provided for them? i am a lifelong democrat with hardworking professional grown children who deserve to keep what they earn. how about a flat tax rate at least?
From Sarasota, FL, 07/15/2009
Oh, Robert Reich, your idea of the bumper sticker, "Tax the very wealthy to keep everyone healthy," will have at least one entreprenuer "Reich"-ing to to the printer. A fun idea for someone enterprizing, but it won't be me! I'm too busy tweaking my play.
From Minneapolis, MN, 07/15/2009
After the TARP bailouts of last fall, the wealthy of this country should be happy to pay for this health care program. They're just lucky we don't burn their mansions down with them still inside.
07/15/2009
The problem with Mr. Reich's analysis is the the "tiny sliver" of the income he says is fair to take for this program is in the bulls-eye of every city, state and other federal program looking for a politically expedient means of paying off their budget deficits. A tiny sliver here for this and a tiny sliver there for that and pretty soon there is no incentive to invest, hire, expand or even strive to achieve. Why bother when two-thirds of income taxes come from 3% of the taxpayers and 3% of the income taxes come from two-thirds of the taxpayers.
From Winston-Salem, NC, 07/15/2009
As someone who hopes to make enough to be affected by this proposal I do not mind the notion of paying more taxes to help with a new healthcare plan. I am willing to pay my disproportionate share. However, I think that all Americans should pay something, and all Americans should be eligible for the plan. Unfortunately, I don't think it will really work. Only taxing the wealthy will leave this plan woefully underfunded.
From Memphis, TN, 07/15/2009
So Robert Reich, your Marxist commentator, has now reduced the entire debate over the most complex issue of the 21st century to a cutesy slogan and concluded that all further thought, heaven forfend actual analysis, unnecessary. This is little short of sheer idiocy.
I am not wealthy. Paying for health insurance is admittedly expensive. I'm a 49 year old attorney with five children. It is absurd that ANYONE in the United States with a memory longer than ten years can seriously think the federal government will succeed in running our health care system by imposing taxes and a new bureaucracy. Lesson 1 from the last forty years of LIFE in these United States: FEDERAL BUREAUCRACIES AND PROGRAMS NEVER DIMINISH. Lesson 2: FEDERAL PROGRAMS ALWAYS COST ten times the amount the proponents originally claimed. Lesson 3: By creating a federally administered program you create a self-perpetuating special interest group with an incentive to expand the program, tax more and more of the public, and spend more tax dollars on the new "entitlement". Have you lost your mind? Or as a member of the media, do you simply take comfort from the notion that the worse things are, the more job security you have in continuing to cover it?
From Atlanta, GA, 07/15/2009
Since when should the government physically take from the most successful Americans and give to the least. Before you label me as an uncaring well to do, you should know that I donate almost 10% of my gross income to charity. It is not the governments job to redistribute wealth. What on earth have they ever done efficiently except the military? This is going to be another and probably the biggest mismanaged government pork program ever! This will be implemented by the same guys that couldn't find the Madoff $150B ponzi scheme. Great. We don't mind helping the hopeless, just the clueless.
From Nashville, TN, 07/15/2009
Let's not forget that the wealthiest are already taxed at 33-35% of their income, and that's likely to increase even more under the Obama administration. For many, there are also state income taxes. Where do you stop?
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