Back during the Space Race, when I was about 10 years old, I had a plan — sort of like Elizabeth Warren’s plan. Only instead of universal healthcare I wanted to build a rocket ship, and I had a plan to pay for it.
I was going to ask for an increase in my allowance, cut back on buying baseball cards, hunt down and return some bottles and cans to the recycling center, and also ask my parents to kick in some money. The sad news is I didn’t get my space flight, and, the reason has everything to do with my funding plan.
Jumping forward to the present time, we’re faced with a few candidates for the presidency that support universal healthcare for all.
Bernie Sanders is one of them, and surprisingly, he openly admits that to pay for it he’ll raise taxes on everyone — a lot! It’s not a popular thing to say, but it is at least brutally honest.
Now let’s have a look at the Elizabeth Warren plan.
For several months, candidate Warren has dodged questions of how she would pay for “free” healthcare for everyone, including undocumented immigrants, and now we have the answer. She can’t! Oh, she does have a funding plan, but it has about as much of a chance of happening as me paying for my rocket ship.
If you thought the plan to pay for the rocket ship was stretched across a lot of sources, here’s a list — and not even a complete one — of where Warren plans to get to the $52 trillion she needs for universal healthcare.
- Increase taxes on large corporations and banks.
- Make all businesses pay taxes instead of paying for private healthcare.
- Make illegal immigrants pay taxes.
- Tax financial transactions.
- Tax capital gains at the ordinary income rate.
- Even eke out a little in taxes from the middle class since they will take home a few more bucks instead of cost sharing with their employer for private healthcare.
Regardless of how ludicrous it seems to cobble together funding like this, it was all done so she could continue her mantra that her universal healthcare plan would not raise taxes “one penny” on the middle class. But, the middle class will pay more in taxes. Let’s just pick one line item — how about making businesses pay taxes instead of paying private healthcare premiums?
There are about 30 million small business in the United States, and under the Warren plan, they all would be legally mandated to pay a healthcare tax instead of shopping for a private plan and freely selecting an appropriate premium like they do now. Small business taxes? That sounds like the middle class to me.
Then there’s her sleight of hand that theorizes that since workers won’t be paying a portion of their employer provided healthcare costs, they’ll take home a little more in their paycheck and that extra income will be subject to tax. That sounds suspiciously like the middle class will be paying more in payroll taxes, right?
This one didn’t make the list, but her plan also includes eliminating the medical expense deduction for income tax purposes. Yes, most middle class folks take the standard deduction, so this doesn’t affect the masses, but many itemize because they had a tough year medically — and Warren’s plan eliminates that deduction. Less to deduct means more taxable income means higher taxes on the middle class. Do you see a trend?
We’re not even going to consider the fact that a financial transactions tax means everyone with a 401K or an IRA will pay more in taxes — and most of those folks are middle class. Or, that increasing taxes on banks means middle class folks will pay more in fees and charges to cover it.
And finally, as if the plan wasn’t crazy enough already, there’s an item buried deep inside to make it all balance. She apparently came up a few trillion dollars short after adding everything up so she plugged that hole with the idea that better tax enforcement would raise the nice round number of $2.3 trillion dollars.
I have a better idea. Let’s build a rocket ship!
Kevin Cochrane teaches economics and business at Colorado Mesa University in Grand Junction and is a visiting professor of economics at the University of International Relations in Beijing, China. He is a regular contributor to several national publications including the Washington Times, Washington Examiner, and American Thinker. He previously was the economic correspondent for both CBS and NBC TV affiliates in Southern California. For 27 years he formerly was a senior banking executive with a major NYSE listed bank holding company and the CEO of a national multi-bank operating company. To read more of his reports — Click Here Now.
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