I saw the commentary on this point at Mother Jones and thought since I'd posted something recently about how American workers will be paying more for health insurance, this fit right in with that discussion.
While you are being side tracked from key issues in the election debate by VP candidate-celebrity news, consider this for size.
It's not to say that Obama will offer health care that will be inclusive of people who want natural health care coverage, he does seems to lean more in favor of aiding the citizens rather than corporate pigs who may or may not be wearing lead laced lipstick.
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.
Let's unpack this. If you get health insurance through your employer, as most Americans do, you don't pay taxes on it. Under McCain's plan you would. So if the insurance premium for your family is $14,000 (the best estimate available for 2009), you'll pay federal income tax, state income tax, and payroll tax on that amount, and your employer will pay the employer share of the payroll tax on it. For an average family, that comes to about $4,900.
But McCain's plan provides you with a $5,000 tax credit, so you're ahead of the game. Everything is OK.
Except there's some fine print hidden where McCain hopes no one will see it: his tax credit increases each year only by the normal inflation rate. Your premiums are going to increase way faster — probably around 6-8% per year. That means your taxes are going to go up 6-8% per year too. The chart on the right, courtesy of CAP, shows the gory details: the tax credit doesn't keep up with the increase in tax payments. In other words, your taxes go up.
If you're in a somewhat higher tax bracket than the median, the news is even worse because your marginal federal tax rate is higher. If you live in a high-tax state like California, the news is even worse because your marginal state tax rate is higher. If you have a big family, the news is even worse because your premium will be more than $14,000 and the taxes you pay on it will therefore be higher. If your employer decides to ditch group healthcare entirely because there's no longer any tax advantage to it, then you're really screwed. And if that happens and you happen to have a chronic illness that no private insurer will touch — well, screwed hardly begins to describe it.
So that's McCain's healthcare plan: make it more expensive, make it riskier, and for some people, make it nonexistent. There's more to say about this, and you can get all the details in this CAP report written a couple of months ago. This stuff is hardly a secret.
September 11, 2008 10:23
McCain's Health Care Tax IncreasePosted by Joe KleinA new rule here: Rather than do the McCain campaign's bidding by wasting space on Senator Honor's daily lies and bilge--his constant attempts to divert attention from substantive issues--I'm going to assume that others will spend more than enough time on the sewage that Steve Schmidt is shoveling and, from now on, try to stick to the issues.
Today's issue: health insurance. 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.