From Faith in Healthcare (https://faithinhealthcare.org):
Last week, Democratic 2020 Presidential front-runner Senator Elizabeth Warren released her plan to pay for Medicare for All. As discussed previously here at Faith in Healthcare, Senator Bernie Sanders, academic think tanks, and economists have already set out multiple options for how the U.S. can follow the lead of every other economically advanced nation that guarantees healthcare for all.
Each of those plans features increasing taxes on wealthy individuals and corporations. And that is a very good thing, no matter the conventional wisdom that talk of raising taxes is politically damaging. In fact, here are four reasons why taxing the rich to pay for Medicare for All is a great idea:
- It will reduce our shameful, historic levels of income inequality.
U.S. income inequality is at its highest level since the Great Depression, and our tax policies are a big reason why. In the 1950’s tax rates on the wealthy were far higher than today. In the decades since, politicians seeking big-dollar campaign dollars have slashed their donors’ estate, corporate, and investment taxes, all disproportionately benefiting the richest few, with the Trump 2017 $1.5 trillion tax cut making things even worse.
The result? Today, the 400 wealthiest Americans pay lower taxes than middle income earners, despite the fact that those Fortunate 400 possess more wealth than the bottom 150 million Americans combined. That inequality hurts not just those at the income ladder’s bottom rungs. Such gaps have been shown to stunt economic growth, worsen public health, and contribute to higher crime rates. The Fortunate 400 would not have been so lucky in years past: they would have paid twice as much in taxes in 1980 and three times as much in 1950. It’s time to return to those good old days.
- It will eliminate our current healthcare system’s regressive “tax” on workers.
Every other economically advanced country pays for virtually all of their healthcare through taxes, which can and should be calibrated to increase the obligation of those who are blessed with great wealth. But, in the U.S., most workers have health insurance through their employment. That means they pay for it themselves through premiums, deductibles, and copayments—and foregone wages when their employers pay part of the healthcare cost instead of providing higher pay.
Those amounts are like a tax, since they are often not voluntary. But they are a profoundly unfair tax: they are the same amount for all workers, which makes our healthcare system deeply regressive. The company custodian is assessed the same as the CEO, but the paycheck of the custodian takes a far higher hit in terms of the percentage of pay lost. As economist Gabriel Zucman has written, middle class Americans pay 12% of their income on health insurance through their employers, while the richest Americans pay less than 1%.
Fixing this inequity is the core of economist Matt Breunig’s proposal to fund Medicare for All by switching payroll taxes—including Medicare costs—to a flat tax, set at the same percentage for all income levels. The extra revenue from taxing the wealthy would allow the bite on middle class workers to be far less than it is today. As Zucman and his fellow economist Emmanual Saez write in their new book, The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, for most U.S. workers, adopting a universal healthcare system would amount to the biggest raise in take-home pay in a generation.
- It will close loopholes where rich corporations and individuals hide their money.
An important part of Warren’s and other proposals is their plans to ferret out and tax the places where wealthy corporations and individuals squirrel away their riches. A core proposal is a wealth tax, targeting not just incomes but the often ridiculous luxury possessions that so many own in our current Gilded Age. As Warren colorfully describes it in a hypothetical confrontation with a billionaire “How about we include (in your taxes) not only your real estate, but also your stock portfolio, the diamonds, the Rembrandt and the yacht?”
Polls show strong support for wealth taxes on the super-rich—Warren’s plan only kicks in at wealth levels of $50 million, Sanders’ at $32 million. And the taxes would raise trillions. Similar approaches would target financial transactions and the U.S. profits of companies that try to dodge tax obligations by moving their headquarters overseas.
- It will comply with the mandates of our faith and moral codes.
Regular readers of Faith in Healthcare are familiar with the universal call among faith traditions to ensure healthcare for all. We have another shared mandate, too: to bridge the obscene gap between the rich and the poor in our country. Consider Jesus’ observation in the Gospel of Matthew that it is easier for a camel to pass through the eye of a needle than a rich man to get into heaven. Or the obligations imposed in Islam by zakat or by tzedakah in Judaism.
Tax the rich; care for the sick and the poor. The two go together like peanut butter and jelly. And they are the right thing to do–for all of us.
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