Health care in the United States is a regressive tax

 

Thinking about "Taxes" in a different way to understand a universal health care system.


We make $130,000 a year.  Our tax burden is disproportionally high.  I want to have my taxes raised to fund Universal Health Care.  

 

Our tax burden is 30%, not the 9% my tax return states. 

This year my wife and I will earn more than $130,000.  This puts us in the top 10% of wage earning families in the United States.  It seems like a lot, and it is; over double what the average American family earns per year.  We are quite lucky.

 

However, our disposable income, after everything is taken out of our paychecks, is $90,000.  Still a lot.  But also a lot of “Taxes”.

 

Let me explain why our tax burden is so high.  First, I consider “Taxes” to be everything I pay out of my paycheck, not just Federal, State and local taxes.  I would not feel economically secure without health insurance, life insurance, dental insurance, and retirement - would you?  Therefore, I consider those “taxes”, ie money that is immediately taken out of my paycheck

 

My wife and I both receive 26 paychecks a year, or bi-weekly.  Here is the break down for this year:

 

Gross Income: $128, 596

 

Federal Income Tax withheld: $9100 (though I think we will owe this year)

 

Social Security Tax:  $7488

 

Medicare Tax: $1768

 

State income Tax: $5356

 

Retirement: $5876

 

Insurance:

Dental: $1368

 

Medical (plus HSA contribution): $5856

 

Life: $408

 

Total “Taxes”: $38,194

 

Net Income: $90,402

 

Again, I am lucky.  And I am not complaining in the least.  In fact, like most Americans, I am quite proud to pay taxes!  

 

But what I find interesting is the following bit of analysis

 

As your income increases certain “taxes” increase, but others do not.

 

Those that increase with additional income: Federal income tax, Medicare, State income tax, retirement, the cap for Social Security is set at $7,961, which is for earning $137,000.  Anything above this is not taxed.  So we are basically maxed out here.

 

Taxes that do NOT increase as income does: All insurance, Social Security (as above, after a certain amount).  This amount is over $15,000, or 12% of our income.  This amount is essentially the same for everyone whether you make $60k, $600k or $6mil.  At $60k, this means that you pay 25% on top of your regular taxes.

 

As you can easily see, this is a regressive tax, and yet another argument for a single payer health care system.  It makes no sense that an average American family spends 25% of its income to get health care and social security, whereas I spend only 12%, and a Millionaire would spend 1% or less.  With a single payer system, funded by a progressive tax, the average family would see a significant windfall, while the top 10%, like me, would see an increase.

 

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