Tax Hike Comin’

July 17, 2009

IBD July 16 09

Paying For Reform: New data from a nonpartisan think tank confirm our worst fears about health care reform: The plans proposed by the White House and Congress will lead to economically ruinous tax hikes.

Thursday marked the kickoff for the White House’s push to get medical insurance reform passed in Congress. Top White House aides David Axelrod and Rahm Emanuel and spokesman Robert Gibbs will make a hard sell on reform’s big benefits.

Likely missing from their pitch will be the tragic cost it will mean for the economy once the huge new tax hikes to pay for it are in place. The House bill, for instance, is estimated to cost $1 trillion to $1.5 trillion over 10 years. To pay for it, the White House has proposed raising taxes by $544 billion, almost all on the “rich” — those in the top 5% of incomes.

That leaves a $1 trillion gap. Where will the rest of the money come from? The government claims it will be able to “save” that amount. But please name any government program that saves money over a private one. The only way government will save money is to ration care — that is, give you less medical care at lower quality. Is that your idea of reform?

When the savings fail to appear, higher taxes will have to be imposed — especially on a middle class that’s been led to believe it’ll get something for nothing on health care.

And why the middle class? “Because,” as bank robber Willie Sutton said when asked why he robbed banks, “that’s where the money is.”

Douglas Elmendorf, director of the Congressional Budget Office, sees no savings from the health reform plans offered. He reckons that current legislation would raise costs.

Faced, then, with exploding annual deficits over the next decade of $1 trillion or more, the federal government will be looking high and low — mostly high — for more revenues.

The government’s pitch will go like this: Don’t worry, we’ll make the rich pay. And, indeed, the House’s reform plan will hit millionaires with a 5.4% tax surcharge, and gradually raise taxes on those with incomes starting at $280,000.

“I promised that Americans making $250,000 a year or less would not pay more in taxes,” President Obama said Monday. “These are promises that we’re keeping as reform moves forward.”

But read the bill’s fine print. Those earning less than $250,000 will be hit with new taxes, too. Those who don’t sign up for health care, for instance, will be taxed up to 2.5% of their income. Small businesses that don’t have health plans will have to pay up to 8% of their payroll as a “fee.”

These new taxes will have a devastating effect on the economy. According to the National Tax Foundation, the top total tax rate on Americans — that is, state, local and federal taxes — will top 50% in 39 states.

Will entrepreneurs and small businesses expand and create new jobs if they know more than half what they earn will be taken by government? Not likely.

Two million jobs have been lost this year. If you think that, and 9.5% unemployment, is bad, wait till health reform passes.


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