Health Care News & Discussion
Medicine and the Tax Code
03/04/1996 12:34 PM
The nurse was confused. The patient was confused. And the family became confused when they read their father’s death certificate: The doctor in frustration had entered as the cause of death: Confusion.
Philip K. Howard, author of The Death of Common Sense, states “Humans may be flawed, but at least they can think and act on the facts before them. No ‘system’ of regulatory rules can ever do that.” …There was a time, not so long ago, that doctors could at least think and act on the facts that patients laid before them, something which a rules-regulating fiscal intermediary can never do.
Robert L Bartley, editor of the Wall Street Journal, reviews the Kemp Commission report, which is not merely proposing to debate the arithmetic of taxation; it is starting to reassess the morality of taxation. Rather than get involved in a specific tax plan, rates, flat vs graduated, deductions, and so on, their report is trying to lay to rest the ghost of Henry C. Simons. Mr Simons, a University of Chicago economist from 1927 until his death in 1946. Although a stalwart proponent of laissez-faire, for which his school is known, Simons was, at that time, the godfather of the notion that the tax system should be used to redistribute income. He was insidiously responsible for the operational definition of what income should be taxed, which, according to Bartley, has caused all anti-growth anomalies in tax systems here and abroad. For instance, if you make an extra $1000, you get to keep $720. If you spend this going to Disneyland, according to the report, you incur no further taxes no matter how many times you ride Space Mountain. However if you save or invest this $720 (e.g., towards your future economic security), you incur a whole stream of additional taxes–the corporate tax, the dividend tax, capital gains tax, and estate tax. The Commission has accepted the challenge of how to tax income only once.
Reader’s Digest commissioned a poll to find out what Americans really think of fairness in taxation. They found an amazing consistency; almost everyone thought that a 25% tax burden was fair and should include all forms of taxes, whether federal, state, or local. They found that this 25% did not vary significantly between rich or poor, males or females, white or black, Republicans or Democrats, conservatives or moderates or liberals, the old or the young. More than 68% of Americans felt their taxes were too high. The average tax in this country is 39% when all taxes are added. Everette Ladd, a professor of political science and director of the Roper Center for Public Opinion Research, called this consensus the single most extraordinary finding in the history of domestic-policy polling in the United States.
Dan Lungren, California Attorney General, gave his Fifth Annual State of Public Safety address to the Comstock Club, cited instances of judges, whose pro-inmate stance has turned some federal courtrooms into a prisoner’s playground. One judge, noting that the prisoner was still seated at the table after her ruling, tried to explain to the felon that she thought she had given him a fair hearing. The prisoner laughed and said “That’s OK. I had a really great time…” (Another play ground is the escorted trip to a private docto’rs office.) Only 23-25% of the worst felons ever go to prison… Lungren said the “three strikes, you’re out” law is working. Repeat offenders are asking, “Is it really possible to go through life without going to jail?” Felons are finally waking up to the fact that one has to do something bad to go to prison… Eliminating the felons’ playground of endless appeals and reducing crime will reduce costs to the taxpayer.
Ross Perot also gave an address to the Comstock Club the morning after the State of the Union Address, which he called “theater… a three act play with makeup and dress rehearsals.” He felt sorry for Newt, who looked like he dropped by after a day’s work…why didn’t someone tell him and Dole to have makeup artists?… Highlights of Perot’s talk: The $5 trillion US debt is just the tip of the iceberg. The government has guaranteed $17 trillion in liabilities which exceeds its assets. The recent S & L bailout is only one of its numerous guarantees… During the past decade, the standard of living has decreased as the federal debt has increased another 320%. With 35 years of free candy, it’s hard to give up sweets… In 1965, Medicare was projected to increase to $9 billion by 1990 and in fact has increased to $106 billion. Medicaid was projected to increase to $1 billion by 1990, but in fact increased to 91 billion. The way to save Medicare is to fix it…Medicare is frozen in time… we don’t have one social program that is working… The entitlements (Medicare, Medicaid, Social Security) alone will have a deficit of $4 trillion by 2030… We have the largest trade deficit in the world–more than $200 billion. And we still have people that want to increase our minimum wage, causing even more goods to be produced overseas at 25 cents an hour, further worsening our deficit in trade…I came to Sacramento to build a new screwdriver. This is certainly a simple tool. But it is impossible to design one screwdriver that fits every screw. If we can’t build a screwdriver to fit every screw, how do politicians think they can design a complicated health care system that fits people throughout the country?” Perot deplored the fact that “legislators are no longer writing the laws; lobbyists are no longer in the halls; lobbyists are at the desks writing the laws.” And finally, “Tax money doesn’t come out of the sky. It comes off the sweat of the brow. Tax money should be used as sparingly as water in the desert.”
Debra Saunders of the San Francisco Chronicle commented on the biggest “BUT” of all. Clinton offered $1000 college scholarship to the students in the top 5% of their high school class and up to $10,000 tuition tax credits. The top 5% are generally in the higher socioeconomic level students, and would go to college anyway because they know that college grads make almost twice as much as high school grads ($32,600 vs $18,700). She says Clinton treats tax money as “mad money,” and is really saying, “The era of Big Government is over, BUT: Ask not what you can do for yourself. Ask what your country can do for you.”
Arianna Huffington summarized her evaluation of the state of the union address in the Wall Street Journal as “The president continues to believe that nothing really important can happen in this country unless government either makes it happen or is the star of the “team.”
James Glassman of the Washington Post reports on men and women who are in college and entering the work force. In 1950, this group, in about a 2:1 ratio, was far left politically. In the 1990’s, this has totally reversed. This group thinks that if government wants to provide opportunity, it should get out of the way so that the private sector can work its opportunity-making will…
We seem to be getting the government more involved, not only in our professional lives, but also in the lives of those we serve. The Kemp Commission will be unable to make a major change in our tax structure. The ghost of Henry Simons will not go away. Taxes will continue to be used to encourage whatever society feels is important for our generation. Health care seems to be at the forefront. We can extend responsibility to patients for their health care by placing it in the individual tax code like the mortgage deduction. By making health insurance a tax deduction to employees rather than employers, with a patient responsibility requirements at all levels to make it deductible, patients will reduce their costs significantly. Why don’t we join the next generation by insisting that opportunity requires getting the government out of the way? If we get this obstacle out of the way and only allow it to facilitate personal responsibility through the tax code, we will improve our patients’ physical health and our own mental health.