House Wants to Soak the Rich For Health Care; AP Forgets the 'Again' Part

(Image found at BuriedPlanet.com)

In a wildly meandering report on the status of the POR (Pelosi-Obama-Reid) Alliance's attempt to enact statist health care this year, Associated Press writers David Espo and Erica Werner:

• Told us that the House wants to slap a surtax on "highly paid" Americans without disclosing the percentage of the proposed surtax or how much it might raise.
• Forgot to tell us that wealthy wage earners already pay a "surtax" designed to fund others' health care that has failed to solve any long-term financial issues (maybe you've forgotten too, so I'll remind you).
• Acted as if the legislation under consideration will instantly zero out the number of uninsured Americans, which they falsely claimed is currently 50 million.

Here are the relevant paragraphs from the AP report:

An income tax surcharge on highly paid Americans emerged as the leading option Wednesday night as House Democrats sought ways to pay for health care legislation that President Barack Obama favors, several officials said.

As discussed in the tax-writing House Ways and Means Committee, the surtax would apply to individuals with adjusted gross income of more than $200,000 and couples over $250,000, they added.

In addition, key lawmakers are expected to call for a tax or fee equal to a percentage of a worker's salary on employers who do not offer health benefits.

Rep. Shelley Berkley, D-Nev., a member of the panel, said the proposed surtax on high-income taxpayers appealed to her and others as a way to avoid a "nickel-and-dime" approach involving numerous smaller tax increases. She added that other earlier options had fallen away, including an increase in the payroll tax.

The developments stood in contrast to the Senate, where Democrats edged away from their goal of passing ambitious health care legislation by early August amid heightening partisan controversy over tax increases and a proposed new government role in providing insurance to consumers.

..... Any failure to meet the goal would be a setback - but not necessarily a fatal one - for Obama's attempt to win legislation this year that both slows the growth in health care costs and extends coverage to nearly 50 million Americans who now lack it.

Points:

• Espo and Werner watered down the applicability of the surtax, whatever the rate might be under consideration. that's because there's a big difference between "highly-paid" and "high-income" individuals and families. By pegging the surtax the adjusted gross income, it's clear that the House's surtax targets all income, including investments, capital gains, and any other income that makes it to the first page of the long-form 1040, and not just earnings from "highly paid" work.
• By not telling us how much the House thinks it will raise with a surtax, the AP pair made it impossible for readers to even back into what the surtax rate might be. The guess here is that it would have to be pretty high to make a meaningful dent in the $100 billion or so a year (technically $1 trillion over 10 years) the Obama plan allegedly costs.
• What's worse, individuals and families who are already "highly paid" because of earnings from work are already paying a surtax. Unlike the Social Security payroll tax of 12.4% (6.2% employer, 6.2% employee), the Medicare payroll tax of 2.9% (1.45% employer, 1.45% employee) has no income threshold. That means a high-earner is forced to throw a surtax amounting to $2,900 of every $100,000 of earnings at the retiree health care system for the right to get the same government-provided health care in retirement that a person who makes very little receives. 15 years of rich-soaking later, Medicare has a mind-numbing $34 trillion unfunded liability.
• Espo and Werner didn't tell us whether this surtax implements or is meant to be on top of Obama's long-desired proposal to "repeal the Bush tax cuts" (in normal-speak, that means raise taxes) on high-income Americans.
• By saying that Obamacare supposedly "extends coverage to nearly 50 million Americans who now lack it," the AP pair implied that -- presto! -- the problem of the uninsured will be magically solved. Baloney, says the Congressional Budget Office: After 10 years, CBO estimates that the number of uninsured will go from 46 million to 30 million. Of course, 46 million, 50 million, whatever -- the tired claim about the number is so obviously overblown that it barely needs explanation -- except to AP reporters who want to perpetuate what is for all practical purposes an urban legend.

Espo and Werner didn't look into one other thing, which is this: By the time the Obamanomics ruins vast sectors of the economy and mires others in endless subsidies, will there be anyone left to hit with a surtax besides Hollywood entertainers and and a few thousand professional athletes?

Cross-posted at BizzyBlog.com.