Tuesday, June 26, 2007

Healthy Wisconsin - the debate begins...

The Democrats unveiled their plan for Universal Health Care for Wisconsin. And Republicans are outraged. Not only are they calling it one of the most outrageous tax increases in Wisconsin history, they're incensed that the Democrats completely cut them out of the discussion before they made this proposal. The details:
The basics of the 59-page proposal include a 14.5 percent payroll tax as the funding backbone, broken down into a 10.5 percent tax paid by employers and a 4 percent tax on wages subject to Social Security, paid by employees.

In exchange, the plan promises health coverage to all Wisconsin residents and employees under 65, with the choice of a public or private plan and price tag of about $370 per month for the average employer and $140 for the average employee.

The tax would generate approximately $15 billion annually to start with - something that opponents find disturbing.
I suppose that much money in the government's hands is a frightening subject for those who rail against bigger government.
Yet, it might save companies a great deal of money, depending on how this all breaks down. At least, that's the claim.

What worries me are posts like Mike Hahn's over at the usually well-thought out Letters in Bottles:
Here's what they don't mention: "Social Security wages" are gross wages up to $97,500 per year. That's right, unless you have one heck of a good job, 14.5% of every dollar you make is going to go to the state to pay for everyone in the state to have health care. Sounds like a good deal, doesn't it.

So, not only do state Democrats want to increase taxes on cigarettes, hospitals, gasoline, selling a home or real estate, iPod/iTunes sales online, and a myriad of fee increases - but they also want to take another 14.5% from every employee and employer in the state. Do they honestly think that we pay too little in taxes in this state?

Let's add it up:

Average state income tax rate: 6.5%
Average federal income tax rate: 25%
Social Security contribution*: 12.4%
Healthy Wisconsin contribution**: 14.5%
Total taxes: 58.4%

Bravo for over-stating things. First off, the asterisk means those figures include employer's pay-in as well. Mike says this should be included in the figure as it takes away from the employee's Health Car the employer already provides. Obviously, he has overstated this, neglecting that these fees are meant to replace the money employers already spend on Health Care Coverage for employees. This gives employees a choice while possibly saving employers money.

Take those numbers off and the new total is around 41% percent. Still high.

Second off, I understand throwing the Fed tax bracket number in there is the only way to make those rates sound concrete, but it should be clear to any taxpayer that including that rate is just slightly misleading.

It's easy to come up with a percentage of income that's ridiculously high if you press the numbers enough. Still, I understand a tax hike is not done with a casual flip of the wrist. If the savings are there, then it could be worth it.

This subject could benefit from a little more research and debate on both sides. I'll be looking at this a little closer throughout the week and get back with whatever I come up with. As of right now, I'm just not sure about the plan.

No comments: