Subsidies = Taxes


I’m glad to learn that Olympia Snowe is concerned that subsidy rates are too low in Baucus’ bill, because subsidy rates are too low in Baucus’ bill. Still, it’s important to recall here that as Kant wrote he who wills the ends must also will the means. In the case of subsidies, higher subsidies means more taxes.

Probably the best way to think about it is that the inadequate subsidies amount to a kind of tax on the lower middle class and what you need to do is replace that tax with something else. Since the expenditure would be progressive in its impact, you could do it with regressive taxes on public health hazards like sweeteners and alcohol and it would still be an overall distributively progressive measure. Alternatively, you could get the same distributive impact (but not the public health benefits) with a progressive tax modeled on the surtax outlined in the House bill. Or you could do what Barack Obama proposed in the first place and curb tax deductions for rich people. These strategies all work. But the point is that unless you’re willing to talk about some form of higher taxes, there’s really no point in carping about the subsidies. It’s taxes that fund subsidies.