There’s been a lot of fine analysis of the arguments of Republican governors about the “unaffordability” of the Medicaid expansion, and I’ve added my two cents by pointing out that some of these same governors hate the Medicaid program as it exists today.
But at The Nation Richard Kim has done something even more interesting: taken a close look at some of the unusually regressive tax policies in the states with “rejectionist” governors, and the impact it would have on their supposedly stretched-to-the-breaking-point budgets if they’d get rid of them.
Here’s a sample:
South Carolina’s Nikki Haley wrote in an op-ed that the “price tag to South Carolina tax payers” would be “an extra $1.1 to $2.3 billion” over the next six years. In fact, the Kaiser Commission on Medicaid Expansion and the Uninsured calculated that South Carolina would have to kick in between $470 million and $615 million, depending on how many people chose to enroll. Again, in the first six years of the expansion, the federal government would pay for more than 95 percent of the total costs, between $11.4 and $12.7 billion depending on the participation rate.
South Carolina is also one of eight states that offers a substantial capital gains tax break, a policy that overwhelmingly benefits the wealthiest 20 percent. Since 1991, the state has allowed residents to deduct 44 percent of their long-term capital gains income from their taxes. According to the Institute on Taxation and Economic Policy, in 2010, this tax break cost South Carolina about $115 million in revenue. If they were to raise only that amount annually during the first six years of the expansion by getting rid of the capital gains tax break, they’d raise $690 million—which would more than pay for the Medicaid expansion.
Let’s take a look at another regressive state tax policy. In Iowa, Republican governor Terry Branstad has claimed that the Medicaid expansion is “unaffordable, unsustainable.” But Iowa is one of three states that allow taxpayers to deduct 100 percent of their federal income tax payments from their state taxes. As the ITEP points out in its report, this unusual tax break undermines the progressivity of federal tax policy and overwhelmingly benefits the top 20 percent, who enjoy between 76 and 83 percent of the cuts. In 2011, Iowa lost about $642 million in potential revenue to this tax break—that’s almost 25 percent of its total tax revenue! Governor Branstad himself made out quite well under this tax break. In 2011, he paid just $52 in state income taxes because he was able to deduct his 2010 federal taxes from his 2011 state income tax bill.
What would expanding Medicaid to insure 115,000 residents cost Iowa between 2014 and 2019? Just $147 million. If folks like Governor Branstad paid their fair share of state income taxes, Iowa would raise almost $3.9 billion in those years. Or in other words, it could pay for the expansion more than twenty-six times over.
In Louisiana, Governor Bobby Jindal has said the state can’t “afford another entitlement program.” But his state also allows residents to deduct 100 percent of their federal income tax payments from their state taxes. If it didn’t, it would raise $642 million a year—or $3.9 billion over six years. By getting rid of this tax break for the rich, Louisiana could newly insure 366,000 people by 2019, at a cost of just $337 million to the state, more than eleven times over.
Kim has similar data for Texas, Florida and Mississippi, other states whose governors say they just can’t afford the Medicaid expansion but certainly can afford tax breaks for the wealthiest citizens.
More broadly, Kim helps us remember that government budgets aren’t just numbers on a chart, and don’t come down from on high: they represent conscious decisions reflecting a community’s priorities. Churchgoers are all familiar with that biblical line (Luke 12:34) so always deployed in annual stewardship drives: “For where your treasure is, there your heart will be also.” These governors aren’t victims of hard times or impossible choices: they choose to value regressive tax policies more than providing health insurance for their neediest citizens. In the case of the Medicaid expansion, it’s an especially egregious choice. So you can see where their hearts are.