A Whole New Tax for Health Care?
This is a surprising nugget:
Democrats on three House panels continue to meet privately to seek consensus on a single plan. Democrats on the House Ways and Means Committee said they were trying to decide whether to finance coverage of the uninsured with one broad-based tax, like the value-added tax, or a combination of smaller taxes.
The value-added tax, common in other countries, is collected in stages from each business that contributes to the production and sale of consumer goods. Economists say a 5 percent VAT could have raised $285 billion last year.
A VAT is a good idea. But not in this context. The way most European countries use the VAT -- which acts like a national sales tax -- is simple: You pay the VAT and receive health-care coverage in return. The VAT, in their systems, acts like a premium. That's also how the VAT would work in the voucher system proposed by Ezekiel Emmanuel and Victor Fuchs and the health reform plans proposed by the Tax Policy Center's Len Burman. It makes a lot of sense.
But this doesn't make much sense at all. Levying a VAT to pay for coverage of the uninsured seems like a quick way to kill health-care reform. For the 85 percent of Americans with health insurance coverage, the VAT would be nothing but a charity tax. It wouldn't buy them anything, as it does in the European systems. It wouldn't free them from premiums, as it does in the Emmanuel/Fuchs voucher program. Republicans would view it as a major new tax. If Congress wants to rebuild American health care around a VAT, that's probably a good idea. But simply slapping a new national sales tax atop the existing system? That doesn't get you anything in terms of efficiency, and it's going to scare the hell out of the middle class.
Update: For more on developments with the VAT tax, read Lori Montgomery.
Posted by: eRobin1 | June 16, 2009 12:00 PM | Report abuse
Posted by: mahar1 | June 16, 2009 1:00 PM | Report abuse
Posted by: Jasper99 | June 16, 2009 2:36 PM | Report abuse
Posted by: Dellis2 | June 16, 2009 2:37 PM | Report abuse
Posted by: roublen | June 16, 2009 3:03 PM | Report abuse
Posted by: roublen | June 16, 2009 3:13 PM | Report abuse
Posted by: pseudonymousinnc | June 16, 2009 6:14 PM | Report abuse
Posted by: albamus | June 17, 2009 7:20 AM | Report abuse
Posted by: gdelphey | June 19, 2009 3:42 PM | Report abuse
The comments to this entry are closed.