Paul L. Caron

Friday, July 17, 2009

Pasquale: House's 5.4% Income Tax Surcharge Is Not Progressive Enough

Frank Pasquale (Seton Hall), Is the House’s Proposed Health Surcharge Progressive Enough?:

Beneath all the sturm und drang about soaking the rich, the press should focus on three underlying realities. First, income and wealth vastly increased at the top of the distribution over the past thirty years — in part because of corporate cost savings that included denial of health coverage to millions of workers. Second, inequality itself exacerbates the health care crisis, by fueling the allocation of medical care according to profit potential, not need. Third, inequality causes health problems, because societies grow “more dysfunctional, violent, sick and sad if the gap between social classes grows too wide.” The surcharge on the rich is not some random resentment inflicted by Frenchified Madame DeFarges on America’s John Galts. The surcharge will itself help address some of the problems health reform is designed to solve. I’ll unpack these thoughts in a series of posts this week.

Nevertheless, the surcharge is not progressive enough, and this should be the main message of liberals commenting on the House bill. ...  The House’s top bracket for the surcharge is one million dollars, a slight improvement. But it is very hard for me to see why those who make that amount should be treated the same as those in the “Fortunate 400″–the 400 highest earning households which made, on average, more than $263 million apiece in 2006.

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» Healthcare surtax not progressive enough from Don't Mess With Taxes
That's a headline -- and taxation approach -- that's sure to kick the already contentious healthcare reform debate up a notch. Frank Pasquale, writing in Concurring Opinions, says that beneath all the sturm und drang about soaking the rich with a healt... [Read More]

Tracked on Jul 19, 2009 12:16:13 AM


Some evidence of the causal connection between denial of healthcare and income disparity would be helpful. Are there hedge fund managers whose wealth is attributable to denying their employees healthcare? I thought the money was in the 2 and 20. Silly me.

The asset wipe-out in the past twleve months will give us some new stats on wealth distribution. I think it's safe to say that the richest lost the most. That may be fine with Prof. Pasquale, but he can't have his schadenfreude and eat it too.

I'm ok with higher brackets for higher earners, but not starting a paltry $250k where people are still striving. I'd start the surcharge modestly at $1m and increase it at $5m, $10m, and $100m. (And get rid of capital gains for non-contributing partners, i.e., hedge fund managers.)

It would also help is BHO would stop lying about his tax proposals. We keep hearing about tax rates being no higher than under Clinton and tax deductions being no less than under Reagan. That's higher taxes than under either, but our "new politics" president can't bring himself to say so. What a disappointment he is!

Posted by: Lawrence Kramer | Jul 17, 2009 1:15:45 PM

1. There is nothing inherently right (or wrong) about a progressive tax rate. What's wrong with a flatter tax rate where people aren't continually penalized for making money?

2. There is an inherent belief in this proposal that at some point, one can earn too much money. I reject this belief, even though I'm not one who makes a lot of money.

3. Look at California and New York, two states with large budget deficit problems created, in part, by their over-reliance on a high progressive tax rate on the highest-earning individuals. Is this a problem you want the U.S. as a country to have?

Posted by: kidding right? | Jul 17, 2009 5:20:21 AM