Tax the Wealthy to Keep Everyone Healthy

It’s the most blatant form of Robin-Hood economics ever proposed. The universal health care bill reported by the House yesterday pays for the health insurance of the 20 percent of Americans who need help affording it with a surtax on the richest 1 percent.

I don’t recall the last time Congress came up with such a direct redistribution. Occasionally Congress closes a few tax loopholes at the top and offers a refundable tax credit to workers at the bottom, or it creates a poor people’s program like Medicaid, paid for out of general revenues from a progressive income tax. But to say out loud, as the House has just done, that those in our society who can most readily afford it should pay for the health insurance of those who cannot is, well, audacious.

There’s another word for it: fair. According to the most recent data (for 2007), the best-off 1 percent of American households take home about 20 percent of total income — the highest percentage since 1928. Yes, I know: Critics will charge that these are the very people who invest, innovate, and hire, and thereby keep the economy going. So raising their taxes will burden the economy and thereby hurt everyone, including those who are supposed to be helped.

But there’s no reason to suppose that taking a tiny sliver of the incomes of the top 1 percent will reduce all that much of their ardor to invest, innovate, and hire in the future. Yet if this tiny sliver means affordable health care for a far larger number of Americans, who will be able to get regular checkups and thereby stay healthy and productive, the positive effect on the American economy is likely to be far greater.

Don’t believe critics who say the surtax will harm small business. According to the Center for Tax Justice, it would hit only five percent of small business owners — realistically defined as taxpayers for whom small business income makes up at least half of their adjusted gross income (from schedule C businesses, partnerships, family farms, and Subchapter S corporations).

Besides, only the profits of a small business would be taxed. The owner of a small business deducts money paid to employees as compensation, as well as operating costs. So, for example, a couple whose income comes entirely from a small business would have to earn more than $350,000 in business profits — after paying all their expenses, including salaries — before the surcharge would affect them at all. And if they earned more, the surcharge wouldn’t reduce their incentive to hire more employees because they pay employees with pre-tax income. And not even purchases of equipment to expand business operations would be affected because most small business owners can write off up to $250,000 of the costs of such equipment immediately.

A surtax is easy to administer. And the whole idea is easy to understand. Tax the wealthy to keep everyone healthy. Not even a bad bumper sticker.

About Robert Reich 545 Articles

Robert Reich is the nation's 22nd Secretary of Labor and a professor at the University of California at Berkeley.

He has served as labor secretary in the Clinton administration, as an assistant to the solicitor general in the Ford administration and as head of the Federal Trade Commission's policy planning staff during the Carter administration.

He has written eleven books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Supercapitalism. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine. His weekly commentaries on public radio’s "Marketplace" are heard by nearly five million people.

In 2003, Mr. Reich was awarded the prestigious Vaclev Havel Foundation Prize, by the former Czech president, for his pioneering work in economic and social thought. In 2005, his play, Public Exposure, broke box office records at its world premiere on Cape Cod.

Mr. Reich has been a member of the faculties of Harvard’s John F. Kennedy School of Government and of Brandeis University. He received his B.A. from Dartmouth College, his M.A. from Oxford University, where he was a Rhodes Scholar, and his J.D. from Yale Law School.

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2 Comments on Tax the Wealthy to Keep Everyone Healthy

  1. Mr. Reich,

    The story of Robin Hood and his merry men is just that a fantasy story. The best definition Webster’s dictionary has is – “the power or process of creating especially unrealistic or improbable mental images in response to psychological need”. In your story Mr. Reich taking from the rich to give to the poor in the form of health care, or health care insurance is just that a fantasy.

    I am one of the small business owners as you put it; I have a Subchapter S Corporation. And your article states that I won’t be hurt by this small tax increase on the top 1% of the wealthy members of our country. What you’re saying is a fantasy pure and simple.
    My company is, or should I say was regularly hired by the larger companies to do a specific duty. When the economy went south for them, well they have no need for my services thus in the world of reality. My business drops off and I can no longer afford the luxury of say, a good health care plan. And since the business is not doing what it was intended to do, the luxury of having employees to help me disappears too. That means lost jobs in the world of reality.

    It’s just this simple the source you stated “The center for tax and justice” is just dead wrong, they are living in the fantasy world. Or to be kind maybe they overstated, no on second thought they are just dead wrong.
    The people in business that I know, and I think that’s the key, businesses are people, seems like that is usually overlooked. The ones I have met over my 32 years in business are all in the same position it doesn’t matter which industry it is. People in business are always trying to get new business or help each other out when it’s good for business.

    You sir don’t understand reality, people who have money create jobs. Whenever you take away the incentive or a chance to make a profit, why take this risk of introducing a new product or service. Why even spend money on research, risk without reward, now that’s fantasy. They are risking that there may be a reward; they understand that they may miss the mark and lose money to, but when you take away the chance for profit. And guarantee that the government will take your profits that were hoped for; well it’s just not worth the risk. We just won’t take the chance and that means no new jobs.

    The real problem between theory (fantasy) and reality is that fantasy is wonderful beautiful world where everyone lives happy, but reality is a bitch.

    Best regards,
    Scott Given

  2. Here we go again. Why do liberals hate successful people? I don’t know anyone who doesn’t want to do better in their job, want a larger paycheck, or seek to improve their business and become more profitable. So as most folks seek to achieve success, the nutty left attacks success and wants to bring down their income to the level of everyone else.

    Take their money from them – they can afford it, we’re told. It is simply ridiculas, but what we can expect from former Clintonians like Reich who I wish would just go quitely away. Typically those making more money are also creating jobs. Taxing them more and more simply eliminates jobs. Great plan, Reich.

    Punishing success is class warfare – a tenant of Socialism, Markism, and Communism. I want none of that nonsense.

    We enjoy Capitalism here in the USA. It works everywhere it is tried. Since Mr. Reich appears unfamilar with the concept, I’ll explain in little words so I don’t loose hime. Capialism in essence is a free market for business that determines profit and loss based upon what people are willing to pay for something and the need for a product. This logically leads to success or failure. No one is rewarded for bad behavior or lazyness. Those who work hard and smart can find unlimited success. Those who don’t will find all the failure they can endure. And for those who do fail, their are plenty successful people who give to charities to help those who want to be helped to try again.

    Therefore, anyone who wants to punish success clearly does not understand what our country is based upon. They don’t believe in People’s ability to help themselves. They would prefer to hold down those who are struggling and demand they crawl on their hands and knees to the powerful and beg for money and food. They want to do this by moving all money through the government and then they can feel good handing out food and money the the poor – while not realizing they made them pooor in order to feel good. It is warped. It is Liberalism.

    Capitalists want everyone to be successful, make as much as they want or can, and become whomever they want to become. What’s wrong with that?

    I reject any rationale (If Mr. Reich can be called rational) trying to suggest success should be punished via taxes. If taxes are needed for the country, then EVERYONE should pay them. That’s fair. Every year, fewer Americans pay taxes and more of the burden is placed on the wealthy. If we follow nuts like Reich, eventually we’ll tax the rich to the point where no one is rich anymore, only Bill Gates will pay taxes, and the rest will crawl to the government begging for food and money. That is what Reich aspires toward. That is the nigghtmare the Left want to bring down upon us.

    That is not what I want for a future – and I’m not alone. The Left’s nutty ambitions are not what this country was founded upon. Hard work, inginuity – these are our foundation. Capitalism – try it, it works!

    Mr. Reich – if you don’t like Capitalism, don’t try to tarnish it or wreck this country. Go to another country like Cuba that has your kind of system. You’ll find friends there.

    Leave America alone.

    God Bless America (and all those who love Capitalism)
    Steve Harris
    Not a rich guy, but trying to be…..

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