Last week, House Democrats unveiled their much-anticipated health care plan the same day that the Congressional Budget Office (CBO) released a preliminary scoring of the bill putting a $1.3 trillion price tag on the effort. Weighing in at 1,018 pages, that comes to $1.264 billion per page. But even this analysis understates the true costs of the bill. The CBO only scores bills on a ten-year time frame. So, that $1.3 trillion price tag will only get bigger after 10 years, not smaller, and will do nothing to fix the catastrophic long-term fiscal path on which it places our country.
Among other things, the bill establishes a new government-run health care plan and new federal insurance rules and regulations that will ultimately change the coverage you have today whether you like it or not. Further, for the first time in Americas history, the bill allows for taxpayer-funded abortions. No matter how you feel about the issue, we can all agree that such controversial procedures should not be funded by tax dollars.
President Obama’s health care takeover will not just force most Americans into a government-run insurance plan it will also give us European-style tax rates. Or, actually, worse we will be taxed at higher rates than most Europeans. Americans will be taxed at a higher top marginal rate than most Europeans, including the French, the Germans and the Spanish, and these taxes don’t even cover the full cost of the bill.
Congress is considering raising taxes by $591 billion over 10 years to fund the Obama health care plan, finally putting to rest the claim that expanding government health care would save money, since policies that save money typically do not require economy killing tax hikes. The House’s tax proposal would impose a new “surtax” on top of existing taxes between 1% and 5.4% on singles earning over $280,000, and families earning over $350,000, redistributing that money to pay for their massive government health care program.
U.S. tax rates are already among the highest of industrialized nations. The average top rate for developed nations is 42%. The U.S. average top rate, including the top federal rate and an average of state, local and Medicare taxes is also 42%. If Obama’s tax hike proposal and this new surtax are enacted, this rate jumps to 52% with the scheduled expiration of President Bush’s tax cuts. Higher than Canada, France, Italy, Finland, Japan, Austria, Germany and Australia. America does not need to be a global leader in taxes and wealth redistribution.
This surtax will be a huge job killer. In 2011, this surtax would raise the current top tax rate for a successful small business owner from 35 percent to 46.4 percent, meaning the federal government will take almost half of every dollar earned by successful small business owners. With the scheduled expiration of President Bush’s tax cuts, the federal top marginal rate on small business earnings will be 48% and exceed 50% in most states.
And this tax on small businesses is in addition to the pay or play mandate that will force businesses with payrolls over $250,000 to either provide health insurance or pay a penalty of as much as 8% of payroll to the government. According to the CBO, employer mandates would also hurt wages and decrease jobs: if employers who did not offer insurance were required to pay a fee, employees wages and other forms of compensation would generally decline by the amount of that fee from what they would otherwise have been.
During a recession, these reckless tax hikes will kill the economy by crushing productivity, and slapping down small businesses. Jobs will be lost, innovation will suffer and the recession will strengthen. Alternatively, lawmakers should tighten their belts and stop recklessly writing IOUs on behalf of our grandchildren.
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