Health Care Financing Options


Raising $544 billion over ten years through a “surtax” is an okay way to raise $544 billion. But it’s not my preferred method. Like Steve Benen I think the best way to tax the rich is the way the Obama administration proposed in the first place—limited itemized deductions for rich people and you get $318 billion over ten years. That’s about as progressive in its distributive impact as what the House is proposing, but it’s more economically efficient. Meanwhile, according to Mark Kleiman:

Doubling Federal alcohol taxes would pull in about $90 billion over 10 years, which is 9% of the total budget offset required. It would also directly reduce health care costs, and reduce the homicide rate by something like 6%.

This would hammer my bottom line, but from a policy perspective it’s a very good idea. That still leaves you with $136 billion that you need. Now you can raise most that through a scaled-back version of the surtax idea that would only pinch the really and truly rich. Last, I would like to see some token amount of money raised by some kind of curbing of the tax deductibility of employer-provided health insurance. Put some extremely high cap on it and get $16 billion or something, but then over time inflation and such will cause more and more revenue to come from that source.