A ‘reasonable approach’ to paying for reform

A ‘REASONABLE APPROACH’ TO PAYING FOR REFORM…. It’s not my first choice for paying for health care reform (this is), but the House is moving forward with a proposal to apply a graduated surcharge, or “surtax,” on the very wealthiest Americans. The indispensable Center on Budget and Policy Priorities released a report yesterday on the proposal and deemed it a “reasonable approach” to paying for reform. (thanks to K.F. for passing this along)

The House surcharge proposal is reasonable and well-targeted. In recent decades, incomes have grown disproportionately for households at the top of the income scale, while their tax burden has fallen substantially. Moreover, despite charges to the contrary, the proposal would have only a small impact on small businesses. The congressional Joint Tax Committee estimates that it would have no impact at all on 96 percent of small business owners — broadly defined as any taxpayer with as little as $1 of business income — and that only half of the 4 percent of small business owners who would be affected derive more than a third of their income from a business. At the same time, the House plan would enhance the ability of small businesses to offer affordable, quality health insurance to their employees.

And while 96% of small business would be unaffected, so too would 98.8% of taxpayers.

Those remaining 1.2% would pay a higher rate, but as the CBPP report explains very well, these are the same very wealthy Americans who’ve done extremely well for themselves over the last quarter century. The richest taxpayers would pay slightly more, and in exchange, we can finally improve a broken health care system, and bring coverage to tens of millions of Americans who haven’t fared as well as the very wealthy in recent years.

And what of the small businesses? While 96% of small businesses would feel no impact at all, the CBPP analysis also found that the reform package would extend key benefits to these businesses. For example, the House Democratic plan would “eliminate insurers’ ability to increase premiums for small businesses based on their workers’ health status and other factors,” “allow small businesses to buy health coverage through a new health insurance exchange in order to lower administrative costs and ensure access to quality plans,” and “provide tax credits for the smallest firms to help them offer coverage.”

Some details to consider as the debate progresses.