How Badly Do You Want to Be European?
Posted July 17th, 2009 at 10.55am in Health Care.
President Obama’s health care takeover will not just force most Americans into a government-run insurance plan, it will also give us European-style tax rates. Actually, we will be taxed at higher rates than most Europeans.
Yes, that’s right. No need to do a double take. In order to pay for the White House’s dreams, Americans will be taxed at a higher top marginal rate than most Europeans, including the French, the Germans, and the Spanish.
The White House and the President’s supporters in Congress will soon swing into gear with their slick PR machine and will tell you that this is all scaremongering—and stenographers in the media will be all-too ready to amplify the message. It is, alas, not scaremongering.
Brian Riedl and Curtis Dubay, two top senior policy analysts at The Heritage Foundation, posted a web memo on Wednesday that is highly worth reading. It shows what is about to happen to our top marginal rates with the expiration of the 2001 and 2003 tax cuts and the addition of the 5.4% surtax on high earners that the House of Representatives will soon vote into law.
The average top marginal income tax in the U.S. will be above 52%. You know what they are in France? 45.8%. Germany? 47.47%. You can find the table below on the Foundry. It makes for sad reading.
The top marginal is important because it is the tax that is levied on the last dollar earned. This means that it is the one that incentivizes work, investment, and overall effort. It is the one that dictates how strongly our economy will hum.
As Rield and Dubay note, once we do this we will suffer from the same afflictions that have haunted Europe for decades.
We know our President likes Europe. The question is—how badly do you want to become a European?
- Author: Mike Gonzalez
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July 17, 2009 Koen Swerts, McKinney TX writes:
I can only echo your concerns. The European health care system might look attractive from the outside but do not be deceived. Having lived in Europe for more than 30 years I know first-hand what the negative effects are of a universal health care system. It would work fine if all people were honest and would use the system as it might have been intended. Reality is that such government-run system, as any government-run system, is abused in every way possible. In Belgium for example, “official health care fraud alone would amount to 200 Million Euros (280 Million USD) yearly (1% of total budget). The European estimates for health care fraud are between 3-5% of the whole health care budget. Apart from actual fraud a universal health care system also does not incentivize people to take care of their health. When US obesity rates have increased till around 30% and a lot of deceases are directly influenced by obesity (diabetes, fatty liver disease, stroke, high blood pressure,…) how would people be incentivized to control their weight and health? Is it fair that the whole of society would need to pay for unhealthy behaviors of some (smoking, over-eating, drinking,…)?
Another negative effect of universal health care is the impact on the economy. When health care is as good as free, as in Belgium, workers tend to miss-use the system and use sick-leave, sickness as an excuse to stay home from work. In Belgium a company yearly loses on average 78,500 Euros (110,809 USD) for every 100 employees due to people staying at home sick without actually being sick. Doctors are all too eager to write fake sick notes.
The US health care system is broken, that’s certain. We need to solve the cause though and not the effects. Reality is that Americans have to pay way more for similar health care than in Europe. The US medical world has always used the excuse of liability insurance, but this does not explain why in the US, the patient gets charged 3 to 5 times more than in other countries. It seems that there is no competition at all in the US for medical costs and this would be something to look into. Of course the medical lobby is so strong in Washington that this would be an uphill battle. Competition in health care would be a good step in the right direction.