Any time there is a way for the country to become more efficient, I am in favor of it. Looking at France
, and Canada
you can see that the average cost spend on health care in the US could potentially be cut from over $5000 to $2500 using the advantages of economies of scale. This is efficient, but it is also expensive. Even at $2500 per year, universal health care would still be a minimum $750 billion program. Getting this amount of money will be detrimental to the economy in one way or another. Some ways of raising revenue are better than others though. I’m going to try and find out if there is an acceptable way, in my own opinion, to raise this kind of money.
For me personally to support a universal health care program, the money absolutely cannot come from income or payroll taxes. Since everyone receives the benefits of universal health care, everyone needs to pay into the system. Medicare’s 1.45% payroll tax for at least the employee would have to be removed. The employer would still provide roughly $71 billion
a year from the old Medicare payroll taxes, leaving a gap of $679 billion of new revenue needed to fund the health care system
First, lets look at the benefits. You are still going to have your copays but you will no longer need to by health insurance. I have some of the cheapest insurance you can get and I still pay $470 a year to cover just me. If I took insurance for a family of 4, it would be just over $1100 a year. You will have to check your insurance policies to see what you would save. The statistics show that the average US citizen pays $5000 a year. Removing payroll taxes will save you 1.45% of your income before taxes. For a person earning $40,000 a year, that is $580. Obviously, if you do not have health insurance, the benefit would be that you now have it.
Ways to raise tax revenue without increasing payroll, income, business taxes.
SALES TAX: A national sales tax would have a tax base of anywhere from $6 trillion
to $7.4 trillion
each year. At $7.4 trillion(most recent data from 2003), the national sales would bring in $74 billion for every 1% of tax
. This would be in addition to state sales tax, which can be as high as 7.25%
. This is an unfeasibly high amount of total sales tax IMO since a vast amount of foreign experience indicates that retail sales taxes cannot be collected
much above 10 percent without breaking down.
CIGARETTE TAX: Smokers are more likely to be using the national health care system, so I would be shocked if a proposal did not ask them to pay more. Federal cigarette are currently 39 cents
per pack raising revenues of roughly $7.7 billion. This is equivalent to just under $200 million of tax revenue for every 1 cent tax increase per pack
. This is obviously not a strong source of federal revenue since it would take a $3.75 increase in federal taxes per pack of cigarettes to equal a 1% increase in the national sales tax.
GASOLINE TAXES: Smog causes health issues, so a small increase in gasoline taxes may be warranted to pay for universal health care. A one cent per gallon tax on gasoline produces a little over $1 billion of federal revenue per year
ALCOHOL TAXES: No real justification for this, but since I’m doing excise taxes, we might as well look. Current alcohol tax rates
are convoluted, but a few examples are $7-$18 per barrel of beer, 17 cents per gallon of wine(~$7 a barrel), $3.40 per gallon of sparkling wine, and $13.50 per proof gallon of liquor. Essentially, every drink that you have pays 1-8 cents to the federal government. These taxes create a total of $7.8 billion in revenue each year. Again, this is not a strong source of federal revenue since you would have to increase taxes over 9 times what they are today to create as much revenue as 1% of sales tax.
From all of this calculating I am left with an equation to balance(in billion of dollars):
ST = Sales Tax(%)
CT = Tobacco Tax(cents per pack)
GT = Gas Tax(cents per gallon)
AT = Alcohol Tax(percentage increase in all booze taxes) $679 = $74*ST + $0.2*CT + $1*GT + $7.8*AT
If you increased the cigarette tax 6 cents per pack, the gasoline tax 4 cents per gallon, and double all alcohol taxes, you only raise $13 billion dollars. A national sales tax of 9% would be needed for the rest.
Is that worth a national healthcare system to our $40,000 a year earner? Maybe. Removing the excise taxes, (s)he pays 9% extra on everything (s)he buys. Take home pay is about $30,000, and what goes in, usually goes out if (s)he is anything like most of us. Additional taxes on sales would be roughly $2500 a year. If this is more than (s)he pays in health insurance(?) and Medicare taxes($580), then it is not worth it. It wouldn’t be worth it for me.