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.

 

Comments

Post a Comment

Popular posts from this blog

Why it IS economic anxiety, at the root

Polling is important.  Polling can tell us where the participants in the current lifestyle consciousness are, and we do have to take it seriously.  But expecting the participants in the current lifestyle to accurately explain WHY they feel they way they do, or WHY they are willing to believe what they do, is truly problematic. This latest article from 538 is convincing and compelling.  The graph showing how people "feel" about the economy, and how it directly correlates with political party and not how the economy is actually performing is likely the most convincing portion of the article.  The thesis is that the root of the Trump support is not due to economic anxiety, but rather to race and partisan politics that grew up in opposition to the Obama presidency. I do not deny that that is the immediate cause.  I do disagree that it is the ultimate cause. Hate must find fertile ground to overcome the messages we see all around us that tell us to love our brother ...
Read more

The decision to invade Iraq was the biggest foreign policy blunder since the Treaty of Versailles.

While watching the January Democratic Presidential debate, one of the moderators at 538.com, Nathaniel Rakich, said this: “Twenty years later, and George W. Bush, Dick Cheney and Donald Rumsfeld’s arguments for going to war in Iraq are leading off a presidential debate. It just speaks to how consequential that era in American history turned (out to be).” I couldn’t agree more, except that this does not go nearly far enough.  The decision to invade Iraq in 2003 will go down as one of the worst political decisions ever made.  The long term ramifications are certainly being felt now, but will be felt for generations. Let’s review where we were in 2003: The United States had “won” the Cold War, had established itself as the guarantor of safety for sovereign nations during the Gulf War, had refrained from invading Iraq in 1991, had a growing economy, low inflation, low interest rates, low unemployment, a budget surplus, and incredible world-wide good will a...
Read more

My response to yet another misleading editorial on Direct Cash Payments from the WaPo board

 Please show me your magic wand of "targeting."  This is the 4th article you have published, second from the editorial board against Direct Cash Payments.  And the 4th time that your "targeting" has remained vague at best.  Until you explain exactly how you plan to "target" AND get the relief to people as soon as possible, you are wrong.  Direct cash transfers are the most progressive idea out there, in general. Your arguments: 1. People who don't need it will get it.  Mine: people who DO need it won't unless your "targeting" is 100% efficient. 2. Unemployment benefits would be better.  Mine: that misses a large swath of people, including gig workers and stay at home parents (who are staying at homer to educate their children).  AND it is a drag on employment. 3. It's expensive.  Mine: So is giving everyone a free vaccine which I assume we both support.  At what price is a human life not worthy of being saved.  The tax co...
Read more