Another Taxing Problem

House Democrats are moving forward with their plan to tax health care benefits on those families earning over $350,000.

The proposal calls for a surtax on individuals earning at least $280,000 in adjusted gross income and couples earning more than $350,000, said the chairman, Representative Charles B. Rangel of New York.

It would generate about $550 billion over 10 years to pay about half the cost of the legislation, Mr. Rangel said. As the proposal envisions it, the rest of the cost would be covered by lower spending on Medicare, the government health plan for the elderly, and other health care savings.

With the economy still hobbled and Republicans already sharpening their tax-and-spend attack line, the proposal is perhaps the clearest expression yet of the mandate that Democrats believe they won last November, when voters expanded Democratic majorities in Congress and sent Barack Obama to the White House.

An aide to the House speaker, Representative Nancy Pelosi of California, said she and other leaders were supportive of the idea, which they concluded would be their main way to pay for Mr. Obama’s top policy priority: expanding health insurance coverage to virtually all Americans and curtailing the steep rise in the cost of medical care while improving patient outcomes.

But it remains unclear whether the Senate will go along. Most Republicans there, or perhaps all, oppose the idea, along with some centrist Democrats.

Even in the more liberal House, where Democrats have a majority of 255 to 178, the tax proposal will most likely cost a substantial number of Democratic votes. The Blue Dog Coalition, made up of 52 fiscally conservative Democrats, expressed apprehension this week about the unfolding health care legislation, and that was before Mr. Rangel’s announcement Friday.

As I said yesterday, this idea's a non-starter in the Senate. It's a good idea, but one that'll never get past our Guardians Of Bipartisanship because Republicans will never go for it...and that means ConservaDems will find a way to oppose it too. If enough of them do so, it's curtains for this one.

It might not even get out of the House, as the Blue Dogs will almost certainly rise up en masse to block it. If all of them revolt, it's dead.

So what's the answer? We do have to pay for this plan somehow. But the argument coming from the right will be that any additional taxes will simply drive America's wealthy to move to other countries. That argument may have play in the Eurozone, but honestly, where are the wealthy going to go, Toronto and commute? To a country that has...gasp...social health care for all citizens? To Mexico and hop across the border once in a while to go shopping?

If a new program results in drastically lower premiums for all Americans (including the rich) won't they save money too? We'll see how this goes, but frankly I somehow doubt a lot of middle class Americans making $35k a year are going to complain too much about the guys bringing down $350k having to help pay for health care.

Of course, pretty much anyone in Congress is going to be making over $350,000 or so. We'll see what the reaction is. Surely we'll see from the right how this plan will lead to health-care rationing. You're already subject to rationing by your ability to afford the costliest health care on the planet.

As BooMan says this morning, your health insurance through your employer has a provider that stays in business by not paying your claims. Our employer-based, corporate-profit based system has to go.