Republican Proposes Cutting Taxes for the Wealthy

Intuitively, if one were going to initiate a large program through which the federal government subsidizes health care expenses, you would want a disproportionate quantity of subsidies to go to people of modest means. People with very high incomes would get more modest subsidies. Or maybe everyone would get the same subsidy. Or you could be Mitt Romney:

To help control costs, Romney would allow all Americans to deduct from their taxable income all of their health-care costs including premiums and most out-of-pocket spending. Now, only people with a lot of expenses can deduct the cost from their taxable income.

As with all other tax deduction schemes, this has a highly regressive impact. Low-income Americans who pay FICA but not income taxes will get no help whatsoever. High-income people in the top bracket will get large tax cuts. People in the middle will get, well, a middling level of help.

Comments

"People in the middle will get, well, a middling level of help."

why even assume that's true?

there would probably be a cut-out so that the vast bulk of the middle-class got screwed.
after all, you have to get your revenue from somewhere, or what will you rebate to the rich?

Posted by kid bitzer | August 24, 2007 10:54 AM

you have to get your revenue from somewhere, or what will you rebate to the rich?

I'm confused. What does this have to do with Republican fiscal policy?

Posted by Gabriel | August 24, 2007 11:04 AM

Bleck....I already have enough trouble keeping track of all my business expenses. This would take hours and hours of bookkeeping to do manually.

Posted by MarkT | August 24, 2007 11:08 AM

Big whoop: I'm guessing most of the people who could really benefit from this already have workforce Cafeteria plans that already allow you to pay medical bills out of pre-tax dollars.

Posted by sara | August 24, 2007 11:19 AM

How would this control costs? It would reduce your AGI, which might reduce the amount of taxes you pay, but it does nothing to bring down the cost of health care at all.

Posted by Naveen | August 24, 2007 11:22 AM

Is this really any different from Rudy's plan? I know the words he uses are different, but are the results?

Posted by Joe Klein's conscience | August 24, 2007 11:39 AM

Full tax-deductibility of college tuition would work the same way, no?

Posted by Davis X. Machina | August 24, 2007 12:49 PM

As with any of these tax credit based health care solutions, they do nothing for the people who can't pay the medical bill today.

You can't landlord "Sorry, but I had to spend rent on medical bills. I'll pay you back after I get my tax refund next year." Only those with deep pockets can pay today and wait for a tax deduction a year from now. That would be the rich.

These healthcare tax deduction schemes are nothing more than ways to give more tax breaks to the wealthy.

Posted by gonzoknife | August 24, 2007 1:33 PM

Full tax-deductibility of college tuition would work the same way, no?

Yep. Including the ability of the providers to raise rates based on easier affordability since the payment is deductible.

There's one, and only one standard for evaluating the efficacy of these plans: "If I were self-employed or had a middle income job that didn't provide health insurance, would this make it as easy for me to provide myself and my family with health insurance as I could if I could get it through my employer?"

I'm thinking the answer to Romney's plan is "no."

Posted by Tyro | August 24, 2007 1:35 PM

Republican Proposes Cutting Taxes for the Wealthy

What's next? A headline about a dog biting a man?

Posted by majun | August 24, 2007 2:41 PM

"Republican Proposes Cutting Taxes for the Wealthy"

No. Really?

I almost didn't read this post because the headline was so "Duh."

It really irks me that average Americans buy this "tax deduction" crap. Especially those poor schmucko working-class "Reagan Republicans" who don't know FICA from income tax.

Posted by CalGal | August 24, 2007 2:45 PM

Matt's right that it's regressive, but he doesn't mention that that's already the situation we have now. Health insurance is tax deductible and most people get it through their employers, so that just helps the rich at the expense of the poor. The only additional thing this proposal does is to remove the disadvantage suffered by people who don't have employer provided insurance.

Posted by ed | August 24, 2007 3:00 PM

You know sometimes I don't know whether to hold Matt's early support for the war or his vote this asshole in 2002 against him more. What were you smoking in the fall of 2002?

It should be noted that this is a another big flip-flop for Mitt. He had one acheivement as Governor of Mass, the bipartisan healthcare bill, and he's walking away from even that.

Posted by AJ | August 24, 2007 3:02 PM

Typical GOP rubbish, really. This whole "tax deduction" twaddle doesn't do jack for people who can't afford a doctor's visit in the first place. Or who can't afford to take proper care of their diabetes, and thus end up with far more serious problems down the road. Or people who can't afford to get immunizations and decent dental care for their kids.

No, it's just more money for rich people, with a sop to those middle class people who are lucky enough to have health insurance -- but who are not yet smart enough to realize they're getting taken, too.

Proposing a new deduction is and always will be the most regressive form of taxation -- because those who ain't got nothin' to spend on whatever it is being deducted will get no help whatsoever.

Pathetic, but that's been the GOP's whole philosophy this last generation: Gordon Gecko's "Greed Is Good". That, and a total lack of concern for the future. Or for other human beings.

Posted by Becca Morn | August 25, 2007 3:57 PM