This doesn't get enough attention:
From http://www.nytimes.com/2008/05/01/us/politics/01mccain.html :
Though Senator John McCain has promised to not raise taxes, his campaign acknowledged Wednesday that the health plan he outlined this week would have the effect of increasing tax payments for some workers, primarily those with high incomes and expensive health plans.
The campaign cannot yet project how many taxpayers might see their taxes go up, said Douglas Holtz-Eakin, Mr. McCain’s top domestic policy adviser. But Mr. Holtz-Eakin said in an interview that for some, Mr. McCain’s health care tax credits would not be large enough to compensate for his proposal to eliminate the tax breaks afforded to workers with employer-provided health benefits.
On stops in Florida and Pennsylvania this week, Mr. McCain, the presumptive Republican presidential nominee, has emphasized a free-market approach that he said would lower health care costs and make insurance affordable.
To do so he is proposing a major tax change that he hopes will make the insurance marketplace more competitive and less expensive in part by encouraging more people to buy health insurance on their own instead of receiving it from their employers.
The 71 percent of insured Americans who get their health coverage through their employers now enjoy a significant advantage because the money spent by employers on their health coverage is excluded from their taxable income. If employers chose to pay that share of a worker’s compensation as wages rather than benefits, the income would be taxable.
“Anyway you cut it, if you make health benefits subject to taxation, that’s a tax increase,” said Jonathan B. Oberlander, a political scientist at the University of North Carolina at Chapel Hill. “You can argue with lots of merit that it’s a responsible increase, that it takes away an inequitable exclusion, but it’s still a tax increase.”
From http://www.time-blog.com/swampland/2008/09/mccains_health_care_tax_increa.html
John McCain wants to tax your employer-provided health care benefits. He wants to replace those benefits with an insufficient tax credit--$2500 for individuals and $5000 for families (the average cost per family for health insurance is $12000).
There is a positive, progressive tax aspect to this: wealthier people should have to pay for health insurance themselves, without tax breaks from the federal government.
But make no mistake: this plan will do little or nothing for those who do not have insurance now--unless they are young and healthy--and it may well hurt a fair number of workers, especially unionized workers, who get gold-plated benefits from their employers.
It will certainly do nothing for families with members who have pre-existing conditions or children with special needs--because it makes no provision to regulate the insurers, forcing them to cover all comers at "community" rates that don't discriminate against the people who need health insurance most.
It is amazing to me that Obama campaign has let things go this far without pointing out that McCain--who opposes the energy bill because it would increase taxes on oil companies--is actually proposing a tax increase on health care benefits for American workers. But that is precisely what the Senator from Arizona is doing.
And here http://online.wsj.com/article/SB121867201724238901.html :
In contrast, Sen. McCain's tax plan largely leaves the middle class behind. His one and only middle-class tax cut -- a slow phase-in of a bigger dependent exemption -- would provide no benefit whatsoever to 101 million families who do not have children or other dependents, or who have a low income.
But Sen. McCain's plan does include one new proposal that would result in higher taxes on the middle class. As even Sen. McCain's advisers have acknowledged, his health-care plan would impose a $3.6 trillion tax increase over 10 years on workers. Sen. McCain's plan will count the health care you get from your employer as if it were taxable cash income. Even after accounting for Sen. McCain's proposed health-care tax credits, this plan would eventually leave tens of millions of middle-class families paying higher taxes. In addition, as the Congressional Budget Office has shown, this kind of plan would push people into higher tax brackets and increase the taxes people pay as their compensation rises, raising marginal tax rates by even more than if we let the entire Bush tax-cut plan expire tomorrow.
And all of that needs to be considered with this:
From http://krugman.blogs.nytimes.com/2008/09/19/mccain-on-banking-and-health/ :
Here’s what McCain has to say about the wonders of market-based health reform:
Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.
So McCain, who now poses as the scourge of Wall Street, was praising financial deregulation like 10 seconds ago — and promising that if we marketize health care, it will perform as well as the financial industry!
And this one lays it all out:
http://blog.thehill.com/2008/09/16/mccain-secretly-plans-new-tax-on-middle-class/
John McCain should not be traveling in a bus called the Straight Talk Express. No, that equivocating multimillionaire who kowtows constantly to the wealthy should be riding in one of those private, gilded railroad cars.
That would be symbolically appropriate as well since he is trying to railroad the middle class on taxes.
He is actually proposing a brand new tax on the middle class.
This has gotten so little attention it is astounding. And frightening, frankly, as television reporters and commentators focus instead on inane incidents like the lipstick-on-pigs remark.
McCain intends to tax workers for the value of health insurance that they receive from their employers.
Really.
Although it’s not included in the description of his plan on his web site. It is, however, on the site of the Henry J. Kaiser Family Foundation, a non-profit organization that specializes in health policy.
I understand McCain neglecting to mention this new tax on the middle class. If I were proposing this shocking tax increase, one that will cost the average American worker an additional $110 a month in taxes out of the blue, I would conceal it as best I could too.
So let me provide you with some clarity. This comes from the Kaiser Foundation evaluation of the McCain and Barack Obama health plans. It says McCain would “reform the tax code to eliminate the exclusion of the value of health insurance plans offered by employers from workers’ taxable income.”
The value of the typical plan provided by an employer to a family is $12,106, of which the employer pays $8,824, and the worker pays the remaining $3,282. The median household income is $44,389, which places most American families in the 15 percent income tax bracket.
McCain wants to add the employer’s cost — an additional $8,824 — to that middle class family’s income, then tax it. The hit to the average family is 15 percent of the McCain-added income — $1,323 more in income taxes.
This new tax would affect the 158 million Americans who are insured through their employer.
Right now you should be yelling, “What?” And demanding to know why you haven’t heard about this before. That is because the media keeps focusing on McCain’s proposed health care tax credits — $5,000 for families and $2,500 for individuals.
McCain certainly wants the attention to stay on those credits. It sounds so much better to be giving families tax credits than tax increases. But what you need to know about those tax credits is that they don’t go to you – they’re to be sent to the insurance companies. You never get actual money in your pocket. McCain says it right on his web site: “the money would be sent directly to the insurance provider.”
So if you choose to remain with your employer-based insurance, there’s no guarantee that you’ll ever see any benefit from that $5,000 payment. In addition, giving young healthy workers $2,500 to buy insurance on their own, where it won’t be taxed, will encourage them to leave employer-based plans, quickly raising the costs for everyone remaining and thus eliminating benefits of the tax credits. Finally, the tax credits rise only at the rate of inflation, not the vastly faster rate of medical costs, so, again, their value will quickly erode, according to several studies, including one released last week by health economists from Columbia, Harvard, Purdue and Michigan and published in the journal “Health Affairs.”
Still, somehow, no one mentions the new tax part of McCain’s plan. Even the credits don’t sound so great after you hear the whole story.
John McCain wants to kill employer-provided health insurance. He wants every American to go out on his or her own and try to buy insurance. He says that on his site if you read between the doubletalk. He says, for example, “The key to health care reform is to restore control to the patients themselves.. . .Health care. . . should not be limited by where you work.”
Here’s the way the New York Times put it in an April 30 story, in which there was only straight talk: “Mr. McCain’s health care plan would shift the emphasis from insurance provided by employers to insurance bought by individuals.”
Since 2000, the percentage of employers offering health insurance has declined from 69 percent to 60 percent.
Many more companies would dump their plans as soon as the federal government offered tax credits to individuals who bought their own. Corporations would disingenuously justify this abandonment the same way McCain does — by saying workers would get the advantage of carrying their individual plans from job to job as they move around the country.
They won’t mention the cost, however. To buy plans comparable to what workers now receive from employers, families are going to have to shell out a lot more money from their own pockets.
The math is simple. To buy the $12,106 plan with the $5,000 family tax credit, a worker is going to have to cough up an additional $3,824. (That is the $8,824 the employer previously paid toward the plan minus the $5,000 credit.) That is, assuming, of course, that you can get coverage. Insurance companies are notorious for rejecting anyone with pre-existing conditions, including acne, being overweight and diabetes.
John McCain himself would likely be unable to find an insurer on the private market since he’s had the most serious form of skin cancer, melanoma, more than once. But he doesn’t have to worry because, as a U.S. senator, he’s covered by a government plan. And he’s certainly not proposing eliminating that!
McCain could resolve the exclusion problem by requiring insurance companies to accept people with pre-existing conditions. But he doesn’t. Instead, he suggests setting up a system in which states would become responsible making sure those people get insurance. He says he won’t shift the costs to the states, but what’s the chance of that? He’s establishing a pool of all of those rejected by insurance companies – thus those with the highest risk. And he’s telling the states to deal with the problem that creates.
Meanwhile, insurance companies would be left to profit big time by providing insurance for the young, the healthy and everyone who doesn’t have anything at all wrong with them. What a deal!
He claims this plan will increase competition and drive down prices – as if an individual worker, on his own, without any real knowledge of the system, has the negotiating power of a major corporation with full-time experts on its staff whose only function is to buy insurance for a pool of hundreds or thousands of workers.
While McCain is planning to increase your taxes if you’ve got insurance at work or to force you into the insurance market at a huge financial loss, he intends, at the same time, to cut taxes on corporations — you know, like those giant oil companies that just raked in the largest quarterly profits of any firm ever in the history of mankind. And he plans to permanently retain those income tax cuts his friend George W. Bush gave to the rich, because, of course, the wealthiest Americans, like McCain and Bush, need a break today.
In the meantime, McCain is traveling to states like Michigan, Ohio and Pennsylvania, hard hit by the economic devastation caused by eight years of Bush administration fiscal policy failures. At each stop, McCain is sucking up the middle class – as if his administration wouldn’t cost workers dearly.
He needs to stop lying to America’s workers.
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