One of the major, if not the major cause of a bankruptcy is a major medical happening in a family. Those uninsured or under-insured frequently fail to seek medical advice for a feared medical condition, because they can't pay for it. The fact that there is a big demand for medical care is borne out by the large crowds that turn up whenever medical providers donate their services to whoever shows up.
It would seem that the only viable way to insure everyone in the United States is through single payer. A major selling point that has been heretofore missed is that under a revamped federal income tax rate structure, many of those now insured would get an after-tax financial windfall, because the increase in their taxes would be less than what they currently pay for health insurance coverage.
My proposal is to have a tax rate schedule going from sixteen percent to sixty-four percent. I have tried as much as possible to have the percentage rate hikes to kick in at the same income levels as under the 2014 tax rate schedule; however, because my plan has nine tax rate brackets, versus the current seven, I have had to make adjustments in income levels near the top of the tax rate schedule. Robert Reich, a former labor secretary in the President Clinton's administration, is advocating a top marginal tax rate of seventy percent. Reich may have been influenced by the fact that from World War II to the Reagan presidency, the top marginal tax rate was never under seventy percent. That period was a time of great economic prosperity in the United States. I would prefer a seventy percent top rate but it would be harder to sell politically.
The examples below compare the taxes owed based on the 2014 tax rate schedule with the taxes owed under my 16-64 percent schedule. I subtract the standard deductions and exemptions from the Adjusted Gross Income to arrive at taxable income. Itemization is not considered but would likely have a neutral effect. For ease of reference, I use lines 43 and 44 on the standard 1040 form.
2014 Tax Rate Schedule
Taxpayer, Filing as Single Married, Filing Jointly
Line 43 - $25,000 Line 43 - $25,000
Line 44 - $3,300 Line 44 - $2,848
Line 43 - $50,000 Line 43 - $50,000
Line 44 - $8,363 Line 44 - $6,596
Line 43 - $75,000 Line 43 - $75,000
Line 44 - $14,613 Line 44 - $10,481
Line 43 - $99,000 Line 43 - $99,000
Line 44 - $20,903 Line 44 - $16,469
16-64% Tax Rate Schedule
Taxpayer, Filing as Single Married, Filing Jointly
Line 43 - $25,000 Line 43 - $25,000
Line 44 - $3,504 Line 43 - $4,411
Line 43 - $50,000 Line 43 - $50,000
Line 44 - $11,694 Line 44 - $9,911
Line 43 - $75,000 Line 43 - $75,000
Line 44 - $19,494 theLine 44 - $15,483
Line 43 - $99,000 Line 43 - $99,000
Line 44 - $27,029 Line 44 - $22,203
Tax Increases Under 16-64% Schedule
Single - $25,000 - +$204 --- $50,000 - +$3331 --- $75,000 - +$4881 --- $99,000 - +$6,126
Married, Filing Jointly - $25,000 - +$1563 --- $50,000 - +$3315 --- $75,000 - +$5002 --- $99,000 - +$5734.
Looking at the above, in every case in which a taxpayer's tax increase is less than his/her current health insurance premium/deductible liability, there will be higher after-tax income. To use one example from Public Citizen,which posits a family of four paying a $8,000 premium and having a $4,000 deductible, the financial windfall would range from $10,437 to $6,266, depending on taxable income.
Employer-sponsored family coverage reached $16,351 in 2013, with workers, on average, paying $4,565. This average would now be somewhat higher. Note that single taxpayers with taxable incomes of $50,000 or less would have higher after-tax incomes and at $75,000 the outcome would be about the same. The following are the most recent average U.S. monthly premium costs for the various plans under the Affordable Care Act: Bronze - $256; Silver - $324; Gold - $369; and Platinum - $441. These costs are for single coverage. Even at the Bronze plan level, most low-income taxpayers would have a higher after-tax income under my proposed tax plan.
A single taxpayer with a taxable income of $1,000,000 would pay a tax of $353,045 under the 2014 rate schedule and $514,200 under my 16-64% tax rate plan, or $161,155 more. A married couple, filing jointly, would pay a tax of $342,751 under the 2014 rate schedule and $523,522 under my 16-64% tax rate plan, or $180,771 more. These differences could be released by $20,000 or more of the taxpayers had "Cadillac" private insurance plans.
The uninsured who didn't pay taxes, or paid a relatively low level of taxes would be disadvantaged by my plan; however, they would be helping to finance the new single payer system, whereas presently they are "free-riders." Also, the reason I eliminated the current 10 and 15% rates was to reduce the percentage of those who did not pay any federal income tax for the last year that the IRS had full data -- 47%. Rather than trying to excuse the 47% by arguing that they pay other taxes, it would be better to foster a notion of "We're all in this together," to take some of the sting out of the wealthy having to pay significantly higher taxes.
My proposed tax plan would insure everyone; reduce the income and wealth inequality in the nation; increase the percentage of those who will pay some federal income tax; and significantly increase governmental revenue to reduce future budgetary deficits and fund critically neglected domestic infrastructure needs.
I realize that my plan would lead to the loss of many jobs due to eliminating the private health insurance industry; however, many more jobs for medical professionals and administrative staff would be opened up. There would also be a need for a corps of people to check the doctor and hospital bills being filed to insure they aren't being inflated. The single payer bill that languished in the U.S. House of Representatives for so long, made provision to fund more workers in the health care field.
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