Friday, July 17, 2009

Obama Health Care Plan: A New Tax Avalanche Onto The "Wealthy" Could Doom Any Jobs Recovery

The Obama Mantra Is New Taxes Only On The Wealthy, But What Would That Mean For Business, The Economy And A Jobs Recovery?

The Senate Health Committee cleared a health care overhaul bill on Wednesday, and the House started work yesterday on legislation that would require businesses and individuals to contribute to the cost of coverage. The House bill will cost between $1,000,000,000,000 and $1,200,000,000,000 over the next 10 years as per an analysis by the Congressional Budget Office (CBO). The CBO also predicts the bill would still leave about 17,000,000 people uninsured.

I used the zeros instead of the typical way of stating trillions in order to try and give some reality to the numbers, but in this day and age where billions and trillions are discussed the way nickels and dimes used to be, seeing it is not providing any real impact, at least for me.

fat cats & toxic investments

Part of the House plan will include a 5.2% surtax on "wealthy" Americans earning over $350,000. Individuals, like the guy in the picture above are the ones who would pay the additional tax. Who cares right? What is the difference if these fat cats have to pay so everyone can have health insurance? They are making a lot of money and in the scheme of things there aren't that many of them. Probably in the ballpark of less than 1% of all U.S. taxpayers. Let'em pony up a little more so that this plan can work for all the people, right. Not exactly.

The problem: These "fat cats" are many of the same people that own the small to medium sized businesses that account for a large part of new jobs creation. The same job creation that this economy needs in order to move forward and begin to grow again. These new taxes will not only contribute to negating job growth, but potentially cause the loss of existing jobs as the tax burden causes these companies to cut back or even shut down.

All of this on top of the fact that the government is not very accomplished in running any enterprise in an efficient manner, particularly one as complex and critical as health care.

The Proposed New Tax Would Push The Highest Marginal Tax Rates In 39 States Above 50%

Table 1
Top Effective Marginal Rates under Proposed Health Care Surtax by State Sorted by Combined Top Tax Rate in 2011


State

Avg. Local Rate

Top
State Rate

Top Federal Ordinary Rate

New
Surtax

Medicare
Tax

Combined
Top Rate

Rank

Oregon

0.36%

11.00%

39.6%

5.4%

2.9%

57.54%

1

Hawaii

0.00%

11.00%

39.6%

5.4%

2.9%

57.22%

2

New Jersey

0.09%

10.75%

39.6%

5.4%

2.9%

57.07%

3

New York^

1.70%

8.97%

39.6%

5.4%

2.9%

56.92%

4

California

0.00%

10.55%

39.6%

5.4%

2.9%

56.81%

5

Rhode Island

0.00%

9.90%

39.6%

5.4%

2.9%

56.22%

6

Vermont

0.00%

9.40%

39.6%

5.4%

2.9%

55.77%

7

Maryland

2.98%

6.25%

39.6%

5.4%

2.9%

55.61%

8

Minnesota

0.00%

7.85%

39.6%

5.4%

2.9%

54.36%

9

Idaho

0.00%

7.80%

39.6%

5.4%

2.9%

54.32%

10

North Carolina

0.00%

7.75%

39.6%

5.4%

2.9%

54.27%

11

Wisconsin

0.00%

7.75%

39.6%

5.4%

2.9%

54.27%

11

Ohio

1.82%

5.93%

39.6%

5.4%

2.9%

54.27%

13

Delaware

0.16%

6.95%

39.6%

5.4%

2.9%

53.69%

14

Arkansas

0.06%

7.00%

39.6%

5.4%

2.9%

53.65%

15

South Carolina

0.00%

7.00%

39.6%

5.4%

2.9%

53.59%

16

Maine

0.00%

6.85%

39.6%

5.4%

2.9%

53.46%

17

Nebraska

0.00%

6.84%

39.6%

5.4%

2.9%

53.45%

18

Kentucky

0.76%

6.00%

39.6%

5.4%

2.9%

53.37%

19

West Virginia

0.00%

6.50%

39.6%

5.4%

2.9%

53.14%

20

Kansas

0.00%

6.45%

39.6%

5.4%

2.9%

53.09%

21

Missouri

0.12%

6.00%

39.6%

5.4%

2.9%

52.79%

22

Georgia

0.00%

6.00%

39.6%

5.4%

2.9%

52.69%

23

Virginia

0.00%

5.75%

39.6%

5.4%

2.9%

52.46%

24

Oklahoma

0.00%

5.50%

39.6%

5.4%

2.9%

52.23%

25

Massachusetts

0.00%

5.30%

39.6%

5.4%

2.9%

52.05%

26

Connecticut

0.00%

5.00%

39.6%

5.4%

2.9%

51.78%

27

Mississippi

0.00%

5.00%

39.6%

5.4%

2.9%

51.78%

27

Utah

0.00%

5.00%

39.6%

5.4%

2.9%

51.78%

27

New Mexico

0.00%

4.90%

39.6%

5.4%

2.9%

51.69%

30

North Dakota

0.00%

4.86%

39.6%

5.4%

2.9%

51.65%

31

Iowa

0.30%

8.98%

39.6%

5.4%

2.9%

51.61%

32

Michigan

0.44%

4.35%

39.6%

5.4%

2.9%

51.59%

33

Colorado

0.00%

4.63%

39.6%

5.4%

2.9%

51.44%

34

Indiana

1.16%

3.40%

39.6%

5.4%

2.9%

51.38%

35

Arizona

0.00%

4.54%

39.6%

5.4%

2.9%

51.36%

36

Pennsylvania

1.25%

3.07%

39.6%

5.4%

2.9%

51.16%

37

Montana

0.00%

6.90%

39.6%

5.4%

2.9%

50.48%

38

Louisiana

0.00%

6.00%

39.6%

5.4%

2.9%

50.05%

39

Illinois

0.00%

3.00%

39.6%

5.4%

2.9%

49.97%

40

Alabama

0.19%

5.00%

39.6%

5.4%

2.9%

49.67%

41

Alaska

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

Florida

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

Nevada

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

New Hampshire

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

South Dakota

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

Tennessee

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

Texas

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

Washington

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

Wyoming

0.00%

0.00%

39.6%

5.4%

2.9%

47.25%

42

District of Columbia

0.00%

8.50%

39.6%

5.4%

2.9%

54.95%

New York City^

3.65%

8.97%

39.6%

5.4%

2.9%

58.68%

Source: Tax Foundation calculations, State Individual Income Tax Rates

Note: The rightmost column, Combined Top Rate, is the top effective marginal rate, taking into account deductions and adjustments, and therefore does not equal the sum of the first four rates.


2 comments :

  1. what happens if c.i.t. files for bankruptcy today????

    ReplyDelete
  2. A lot of small and medium size businesses will be in even more trouble.

    ReplyDelete

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