Category Archives: Unintended consequences

“Medicare For All” is more appealing when you hide the enormous tax increase

According to the Washington Post, the “dam is breaking on Democrats’ embrace of single-payer” for healthcare as a fourth member of Congress co-sponsored Bernie Sanders’s “Medicare for all” bill. But the Post makes no mention of the cost for this bill.

Why, you ask, would they only discuss the benefits to be received without mentioning the cost? Hmm…

Heading over to Bernie Sanders’s Medicare for All website, one finds that the cost is estimated to be $1,380,000,000,000. That’s $1.38 trillion.

Bernie Sanders then lists seven ways to raise the required revenue–new taxes, tax increases, and closing loopholes. The largest source of revenue would be a “6.2 percent income-based health care premium paid by employers,” in other words a 6.2% tax on income to be paid by employers, as if employers will just eat the tax increase without passing it on to employees or customers. On top of this is a “2.2 percent income-based premium paid by households,” i.e., a 2.2% tax increase.

Given that all but one of these additional sources of revenue involves directly or indirectly a tax on income, lets just look at the tax increase in aggregate. This year, the federal government is expected to generate revenue of $3.46 trillion. A $1.38 trillion tax increase is the equivalent of all tax rates rising by 40% (40 percent, not 40 percentage points). In other words, social security taxes would have to rise from 6.2% to 8.7%. The lowest tax bracket would have to jump from 10% to 14%. The 25% tax bracket, in which most American probably reside, would need to leap to 35%. And the top tax bracket would have to go from 39.6% to 55.4%.

Bernie Sanders wants to pay for his Medicare For All by taxing the rich. He raises the top tax bracket from 39.6% to 52%, but only on those earning over $10 million. Other high-income people see smaller increases in their income taxes.

How do lower-income earners fare in his proposal? Probably even worse than their high-income counterparts. Although Bernie Sanders tries to hide it by calling one new tax a “6.2 percent income-based health care premium paid by employers” and another a “2.2 percent income-based premium paid by households,” these are, in effect, tax increases of 6.2% and 2.2%, the first to be paid by the employer, who will surely pass all or most of the cost along, and the second to be paid by the earner. If one looks at one’s income tax rate as the total of his income taxes plus social security taxes plus medicare taxes, the lowest tax bracket will go from a current 25.3% to 33.7%, a 33% increase. That may not be the portion paid by the individual, but it’s the amount the government takes and it is the amount paid by earner either directly through his taxes or indirectly through lower wages or highest consumer prices.

The Medicare For All website also claims that a typical family earning $50,000 would save $5,800 in healthcare spending. He does not mention that the new taxes of 2.2% and 6.2% total $4,200. So the saving as much smaller. But the website also points out people currently receive “tax breaks that subsidize health care” to the tune of $310 billion. These would be eliminated under the plan. The website does not say much does a typical family earning $50,000 receive in these “tax breaks.” I wonder why. Needless to say, that $5,800 in savings all but disappears when one accounts for the tax increases and the removal of tax breaks.

Now it’s clear why the Washington Post does not mention the cost of this “Medicare For All” bill. It’s also clear why the Medicare For All website gives a clear picture of how much a typical family saves but not how much it will cost them.

It’s much easier to give away goodies when people think they are free or someone else is paying for them rather than tell them how much it will cost them. If politicians were required to disclose the costs in addition to the benefits (much like a drug advertisement is required to reveal the side-effects), socialist proposals like Medicare For All would surely gather less support than when everything appears to be free.

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First they banned sugar, then salt, then fat, then…

With apologies to Martin Niemöller.

First they came for the sugary treats,
and I didn’t speak out because I didn’t eat sugary treats.

Then they came for the salty snacks,
and I didn’t speak out because I didn’t eat salty snacks.

Then they came for fatty foods,
and I didn’t speak out because I didn’t eat fatty foods.

Then they came for my meat and processed grains,
and there was nothing tasty left for me to eat.

Gay marriage hurts states’ population growth

With the addition of New York this week, six states permit gay marriage. Looking at the data, those states that permit gay marriage are growing more slowly than the rest of the country.

Below are the population growth rate between 2000 and 2010 for those states that permit gay marriage. Data from the 2010 census.

Connecticut: 4.9%

Iowa: 4.1%

Massachusetts: 3.1%

New Hampshire: 6.5%

New York: 2.1%

Vermont: 2.8%

Additionally, Washington, D.C. permits gay marriage.

District of Columbia: 5.2%.

In contrast, the United States population grew 9.7% between 2000 and 2010. Every singe state that allows gay marriage has grown more slowly than average.

Now, I don’t imply that gay marriage reduces a state’s growth rate, though that could be a logical conclusion because heterosexual couples are much more likely to reproduce. Nevertheless, I think the number of people in the LGBT community is too small to effect the population number to that extent.

Instead, it is the other policies of the liberal states, especially their tax policies, that drive migration between states. Notice how low-tax New Hampshire was the fastest growing of all the states listed above. It is the overall effect of liberal policies that are driving people out of these states into more conservative states.

Obama the Luddite

Barack Obama believes that unemployment is high, in part, because of ATM machines.

Our President is totally right. It’s totally the ATMs fault. I think we should go around destroying all ATM machines. Think about how many jobs we’ll create by destroying all those machine.

Luddites of the world, unite!

Taxing the rich to death hurts everybody involved

Robert Price writes in The Wall Street Journal about The Price of Taxing the Rich:

Nearly half of California’s income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population’s during the recession. When they crashed, they took California’s finances down with them.

Maybe, instead of villainizing the rich, the people should pray for their success. And instead of taxing them to death, the government should enable and encourage them to prosper.

Federal Reserve discovers that paying people not to work equals fewer people working.

In case you didn’t know, the Chicago Fed reports:

A research paper published by the Chicago Fed has concluded that extra jobless benefits — unemployed workers can now get up to 99 weeks of benefits — may be contributing up to 0.8 percentage points to the current unemployment rate, which was 9% in January. The Chicago Fed paper said the extra benefits may still be worthwhile, given that in their absence workers may be forced to take jobs that represent poor matches for their skill levels. Also on Thursday, Minneapolis Fed President Narayana Kocherlakota said the natural rate of unemployment — basically, the smallest rate of unemployment that won’t lift inflation — ranges between 5.9% and 8.9%.

For those who are not economically literate, let me summarize: If the government pays people not to work, fewer people will work.

I don’t know why the Fed had to do a study to determine that. Maybe they were just trying to figure out not if it had an effect but how large the effect is. Or maybe it was just a study devised to keep a few economics employed during the recession.

What I really don’t understand is this line:

The Chicago Fed paper said the extra benefits may still be worthwhile, given that in their absence workers may be forced to take jobs that represent poor matches for their skill levels.

So the Chicago Fed thinks it is better to have people sitting around doing nothing rather than do a job below their current skill level? These people really do live in ivory towers.

Is There a Fed in Your Kitchen?

By Marcia Sielaff

Have you been wondering why your dishes and glasses don’t look as clean as they once did? Wonder no more. There’s an environmentalist in your dishwasher.

While you were preoccupied with showers, toilets and light bulbs, the environmentalists were having their way with your state legislature.

The January 31 issue of The Weekly Standard explains it all started in Washington State. The short version is that the Spokane River was polluted largely due to phosphorous run-off from a variety of major sources (industrial and water treatment facilities to mention a few) and from phosphorous in the form of phosphates in dishwasher detergents. The idea was launched to ban dishwasher detergents containing phosphates which is what the Washington legislature did in 2006.

Then the environmentalist lobby went to work getting similar laws passed in other states, although no one knows for sure how much dishwasher detergent really contributed to the pollution problem. When phosphorous gets into fresh water it stimulates algae growth. When the algae die, oxygen needed by plants and fish is depleted.

Although not all states banned the sale of detergents containing phosphates for home dishwashers, enough did so that manufacturers quietly altered their detergent formulas. It just wasn’t feasible to make detergents with phosphates for some states but not others. Householders, unaware that detergents no longer contained phosphates to help soften water, prevent particles from adhering to dishes, or give dishes that sparkle extolled in commercials, assumed their dishwashers were to blame.

Even National Public Radio reported irate home owners’ complaints that, “…pots and pans were gray, … aluminum was starting to turn black, … glasses had fingerprints and lip prints …   and they were starting to get this powdery look to them.”

As is the case with light bulbs that require a hazmat team for safe disposal, this green dream also turned out to have unintended environmental consequences. As the Standard explains, “It was the phosphorus in detergents, after all, that allowed modern dishwashers to function well using smaller amounts of cooler water.”

If more people revert to hand washing dishes to get them clean, more water and more fossil fuel to heat it will be required. Some people put vinegar in an extra rinse, or run their dishwashers twice, using more water and electricity. So, you may ask, exactly what environmental gains have been achieved by the bans.

Well, you can ask, just don’t expect an answer. It turns out that the science behind banning dish detergent is a bit iffy. The Standard points to a 2003 Minnesota study showing only 1.9 percent of the phosphorous there was due to household dish detergents.

However, as Sean Hannity likes to say, “Let not your heart be troubled.” Paper plates and plastic glasses are (still) an option…as are landfills to put them in. Or, since restaurants are excluded from the ban, some people suggest buying dish detergent from restaurant supply houses. But lest the phosphate police come knocking, you didn’t read it here.

Marcia Sielaff writes for What Would the Founders Think.com.