I got here late…did mycowardice really say McCain’s health care plan is socialist? In all seriousness?

Just wondering.

its_a_trap on October 20, 2008 at 12:21 AM

He did say that, and he is waiting for an explanation on why it’s not socialist to raise some people’s taxes while reducing some other people’s taxes.

mycowardice on October 20, 2008 at 12:23 AM

I suppose you are talking to me about Edwards because of my endorsement of Edwards. I picked him for his ideas. (yes yes, everyone here thinks Edwards ideas were terrible)

mycowardice on October 20, 2008 at 12:27 AM

My friend, let me ask you a question. Should Scooter Libby. be pardoned?

mycowardice on October 20, 2008 at 12:34 AM

hawkdriver,

Make sure you find time to answer my Libby question…

mycowardice on October 20, 2008 at 12:44 AM

And that baby is adorable. I’m sure all you Edwards supporter think so too. I think Edwards is very lucky to have two beautiful families like he does. So lucky.

Kudos to Edwards for having two beautiful families. Most people barely manage to have one that lasts for their whole lifetime…

mycowardice on October 20, 2008 at 12:46 AM

First, the exclusion from the gross income of employees for health insurance premiums paid by employers is a longstanding legislative exception to income taxation. The exclusion is not a right–divine, natural, constitutional, or otherwise. Are we clear?

Yes we are, but then so are the rest of our tax system, including tax rate. A 33% or 39% tax rate is no right divine, etc. It’s all open for discussion.

Second, McCain’s health care tax credit is a simple mechanism that puts all workers–employees, greater than 2% shareholders in S corporations, general partners in partnerships, members in LLCs, and Schedule C filers–on roughly the same playing field with regard to the tax treatment of their health care premiums. In short, all workers must include all cash income and (under McCain’s plan) employer-provided health insurance premiums in gross income. From there, you undertake the same income tax computation as normal, and, in the end, you offset your bottom-line income-tax liability with McCain’s $5,000 credit.

If this was the intent, why not simply give a 5000$ tax credit to people that didn’t have employer based health insurance?

Unlike the lie that Obama and Biden tell–that an increase in gross income ($12,000 is often cited for illustration) is not adequately offset by McCain’s $5,000 credit–the proper comparison requires you to multiply the increase in gross income (again, say, $12,000) by the taxpayer’s marginal tax rate (say, 25%). For this example, the increased tax liability would be $3,000 ($12,000 x 25%), which would be offset completely by the $5,000 tax credit. Are we clear?

What we are clear about is that McCain is meddling in the way taxes are paid. Let me give you another case. Imagine your premium is costing you $20000 and that your marginal tax rate is 33%. Doesn’t it show that the 5000$ tax credit won’t be sufficient to cover your real costs?

Putting all workers on roughly the same playing field with regard to the income tax treatment of their health care premiums has nothing to do with socialism. Rather, it has everything to do with providing taxpayers with roughly equal treatment (not necessarily results) under the tax law.

When you start your sentence by ‘putting all workers on roughly the same playing field…’, it’s sounds like socialism. Barack also wants to put people on the same playing field. You chose to finish your sentence with ‘the tax law’, but the same sentence could equally be done with other topics. The point is that you seem to think there is a problem in the current system, an unfairness of some sort, and you want to correct it. And the way you want to correct it is by potentially taxing the people at the top of the ladder, because, according to McCain, those are the ones that will see the 5000$ credit as not sufficient.

Third, the tax credit offers flexibility in a few respects. Employees could, if they wish, choose not to accept the employer’s plan and, presumably, receive correspondingly higher cash wages, which would give them the additional wherewithal to purchase their own insurance. An employee may not like an employer’s plan for any number of reasons. For example, an employee may find a plan that covers matters inadequately covered under his or her employer’s plan or, in the alternative, may cover matters of no concern to the employee. Also, once in an individual plan, an employee wouldn’t need to remain at an employer for fear of being denied coverage because of a pre-existing condition.

That seems to be ignoring the benefit of being in a large group. Most review of McCain’s plan say that people with preexisting conditions will be negatively impacted because their premiums will shoot up. If you add this to the incentive for employers to drop coverage, it’s a recipe for disaster.

Fourth, putting health insurance coverage in the hands of individuals should create a much greater market for individual policies. As things stand, insurance companies devote most of their efforts to tailoring coverage acceptable to large pools of insureds found in employess of employers. I see McCain’s plan as a way of introducing a great deal of competition into the industry, which seems a good thing. I see it as a way to make the health insurance industry more like the auto insurance industry. Employers don’t handle auto insurance for employees, but then there’s never been an exclusion from income for auto insurance premiums paid by an employer for employees.

You might see it that way, but the analysis says it’s not true. This is not an industry in need of competition, it’s an industry in need of regulation. The fact that you want to send people on the fre market means that the people with pre existing conditions will see big rise in their premium, if they can even get coverage. Part of the safety gap in our system is the employer coverage. Remove that and it might be really bad.

I’m sure that I missed a few things, but I’ll repeat what I said above. Ending the income tax exclusion for employer-provided health insurance premiums in favor of McCain’s tax credit has nothing to do with socialism.
…
BuckeyeSam on October 20, 2008 at 1:01 AM

I’ll repeat what I say. His plan will increase taxes for some while reducing it for others. The same could be said about Obama’s tax plan. Let me quote McCain on this topic:

MCCAIN: Actually, my position is that it will be, it will give people actually more money to go out and purchase tax – health insurance on their own and only those with the Cadillac gold-plated health insurance policies today are the ones who might suffer from it. The ones -

STEPHANOPOULOS: So they would see their taxes go up potentially.

MCCAIN: It depends on, on, on what plan they have. But that’s usually the wealthiest people. Ordinary working Americans have the kind of – or an overwhelming majority have the health insurance plans that this tax credit, refundable tax credit, will actually put more money in their pockets for the purchase of health care than what they had before.

mycowardice on October 20, 2008 at 1:30 AM