AMERICAN CONSERVATISM IN 2008 AND BEYOND

http://www.ncpa.org/sub/dpd/index.php?Article_ID=18648&utm_source=newsletter&utm_medium=email&utm_campaign=DPD
THE RETURN OF THE INFLATION TAX
Buried in Nancy Pelosi's health care bill is a provision that will partially repeal tax indexing for inflation, meaning that as workers earnings rise over a lifetime they can look forward to paying higher rates even if their income gains aren't real, says the Wall Street Journal.

In order to raise enough money to make their plan look like it won't add to the deficit, House Democrats have deliberately not indexed two main tax features of their plan, explains the Journal: The $500,000 threshold for the 5.4-percentage-point income tax surcharge, and the payroll level at which small businesses must pay a new 8 percent tax penalty for not offering health insurance.

This is a sneaky way for politicians to pry more money out of workers every year without having to legislate tax increases. The negative effects of failing to index compound over time, yielding a revenue windfall for government as the years go on, says the Journal:

The House tax surcharge is estimated to raise $460.5 billion over 10 years, but only $30.9 billion in 2011, rising to $68.4 billion in 2019, according to the Joint Tax Committee.
The tax would begin in 2011 on income above $500,000 for singles and $1 million for joint filers.
Assuming a 4 percent annual inflation rate over the next decade, that $500,000 for an individual tax filer would hit families with the inflation-adjusted equivalent of an income of about $335,000 by 2020.
After 20 years without indexing, the surcharge threshold would be roughly $250,000.
And by the way, this surcharge has also been sneakily written to apply to modified adjusted gross income, which means it applies to both capital gains and dividends that are taxed at lower rates, explains the Journal:

So the capital gains tax rate that is now 15 percent would increase in 2011 to 25.4 percent with the surcharge and repeal of the Bush tax rates.
The tax rate on dividends would rise to 45 percent from 15 percent (5.4 percent plus the pre-Bush rate of 39.6 percent).
The return of the inflation tax will hit millions of middle-class Americans over time with tax rates advertised as only hitting "the rich," says the Journal.

Source: Editorial, "The Return of the Inflation Tax," Wall Street Journal, November 6, 2009.

For text:

http://online.wsj.com/article/SB10001424052748703932904574511794170939688.html

http://www.kaiserhealthnews.org/Daily-Reports/2009/November/06/Hoyer-Delay.aspx
Hoyer Says Health Vote Could Be Delayed

Nov 06, 2009

"House Majority Leader Steny Hoyer (D-Md.) said 'delay tactics' could prevent the vote from occurring at the 6 p.m. Saturday scheduled time," and "suggested the debate could go into Sunday or next week," The Hill reports. "But he also acknowledged that leaders do not yet have the 218 votes they need among House Democrats to pass the bill." The Hill reports that "House leaders are expected to incorporate any compromise on abortion into the bill Friday in the Rules Committee. Republicans have said that doing so violates the pledge by Hoyer and House Speaker Nancy Pelosi (D-Calif.) to have the complete text of the bill available to the public for three full days prior to consideration of the bill" (Soraghan and Allen, 11/6).

USA Today: "'Unless there are delaying tactics,' Hoyer said on the call, organized by Families USA, 'I think we can finish debate by tomorrow night.' But, he added, the House would consider the bill 'to (its) conclusion' and added that "Monday and Tuesday is a possibility" (Fritze, 11/6).

The Associated Press: "Hoyer sought to pin the blame for any possible slippage on delaying tactics expected from Republicans, who unanimously oppose the health care remake. 'Nice try Rep. Hoyer, but you can't blame Republicans when the fact is you just don't have the votes,' said Antonia Ferrier, spokeswoman for House Republican Leader John Boehner of Ohio. Republicans could stall the bill by demanding roll-call votes on parliamentary matters (Werner and Alonso-Zaldivar, 11/6).

The Boston Globe: "House leaders are trying to rush the bill -- one of the largest and most complex pieces of legislation considered in recent years -- through the lower chamber quickly. They fear that with every passing hour, more issues could arise and create obstacles to passage. Hoyer said discussions are ongoing over two side issues, abortion and immigration. … If the House and Senate both pass legislation, Hoyer said -- rather ominously -- that he expects a 'relatively lengthy and difficult conference' given the major differences between the House and Senate and the complexity of the bill" (Wangsness, 11/6).

The Wall Street Journal: "Signaling the unease of some freshman Democrats in swing districts, Rep. John Adler of New Jersey said Friday he will vote against the bill. Mr. Adler, who won his first term in 2008 with 52% of the vote, said the House bill 'does not do enough to contain costs.' He added, 'Congress should not pass a bill that costs more than $1 trillion' over 10 years. New Jersey was the scene of a big Republican victory on Tuesday, when Chris Christie defeated Democratic incumbent Jon Corzine in the state's gubernatorial race" (Yoest and Vaughan, 11/6).

Meanwhile, "[t]he House will not vote on a liberal Democratic plan to have a fully government-run 'single-payer' healthcare plan, House Speaker Nancy Pelosi announced Friday," The Hill reports in a second article. "Pelosi (D-Calif.) declined to pursue a single-payer plan in the healthcare overhaul. But Rep. Anthony Weiner (D-N.Y.) secured a commitment from leadership in July to have an 'up-or-down vote' on the single-payer approach during floor debate...The amendment almost certainly would have lost, but would have demonstrated what support there is among Democrats for single-payer. But as the vote, now planned for Saturday, has neared, Pelosi has seemed increasingly reluctant to open the bill up for any amendments, even from her own party" (Soraghan, 11/6).

I have many issues of my own, but they are not part and parcel of any of the five legislations now being prepared by congress.

We can blame both the republicans and blue democrats for the delays, but I put more blame on Obama and congress for not providing the right kind of cost savers into their plans.

a) Allow cross-border purchase
b) Remove expensive state regulations on health care; benefit mandates such as 1) hair prostheses (wigs), 2) infertility treatments, 3) acupuncturists, and 4) massage therapy. Ridiculous! Not needed for health reasons.
c) Let workers with health insurance purchase their own insurance outside of the company. This increases competition.
d) Let taxpayers deduct the cost of health insurance from their tax returns. For those who don't have company sponsored health insurance, they pay from before tax for their health insurance, while companies can deduct that cost. Where's the fairness doctrine?
e) Allow portability for those who want to keep their insurance plan.

What's wrong with congress? Can't they see the simple solutions that are now available? Why aren't any of these cost savings written into the current legislation?

a) Allow cross-border purchase

It seems you don't understand what "competition" is all about. If the federal mandate makes all states to provide cross border buying of insurance, what's the problem? You think insurance companies will continue to sell health insurance if they're not competitive by price and quality?

Do you understand what happens in the world economy without competition?

preventing thousands of Cuban kids from getting needed medicines

napalming Vietnamese kids, or just sticking them in trenches and gunning them down

It's the consumers responsibility to quality test what they wish to buy whether it's a washing machine, tv, or insurance. We all do that with auto insurance today; there are many on the market, but the consumer has sole responsibility to pick and choose what he/she feels is the best product/policy vs cost.

It's called competition.

Minimum standards are common across the US; it's what you pay and get for your money that's the issue.

I disagree; my solutions have not been challenged; only a general statement that explains nothing.

I want detail on the reasons why they are not viable.

Minimum standards are common across the US; it's what you pay and get for your money that's the issue.

It seems you don't understand what "competition" is all about. If the federal mandate makes all states to provide cross border buying of insurance, what's the problem?

Minimum standards are common across the US; it's what you pay and get for your money that's the issue.

Do you understand what happens in the world economy without competition?