Saturday, September 26, 2009

The road to wellness

In doing a little research into our health care situation or should I call it the disaster it is, I wondered how it was that all other industrialized nations on the planet were able to provide health care to their entire populations without them worrying about grandma getting capped. It seems years ago long before any economic bubbles and bursts countries took it upon themselves to come up with a slightly different tax system. The VAT or value added tax was put in place to pay for things like health care and education. Simply put when a supplier of a part or material sells it to the manufacturer of a good sold to a consumer each step of the process gets taxed as it's value increases. The odd thing as I see it is that as that tax gets passed along the manufacturing chain and the next in line gets a credit against the tax that was added. So in the end each piece in the chain is paying a little bit to the government in taxes. This VAT is in addition to the state or provincial sales tax on an item. Food and medical items are exempt. This VAT on goods runs between 5% to as high as 25% for everyone in the industrialized world. There are exceptions and reductions for certain items. This would be much like write offs for business and mortgage deductions in our income tax code.
The only thing I don't like about this system is that it would require business to do extensive accounting of all the products they produce. It would become a nightmare for a company producing thousands of products like a small parts manufacturer. But the concept of adding some type of tax to pay for healthcare would sure solve a bunch of problems. Now you might be thinking just what we need more taxes. But consider it this way. If we get the insurance monkey that's getting bigger by the year off corporate Americas' back and ours as well by spreading the costs over a broader area it would work as it has in so many other countries.

At a 5% rate it would cost the average wage earner around $400 per year. Those making less than $20,000 could get a rebate or exemption. Then there's the inequities when our companies export to countries with a VAT. U.S. companies must pay that VAT to a foreign government while most foreign governments have exemptions for exports by their companies. But don't have too much sympathy for our companies as they have been hiding corporate profits by avoiding paying their fair share of taxes with off shore dummy companies. A receptionist in a small office in the Cayman Islands does not count as an over seas division of a company. Once we can work out some of these little details can all the hidden money come out to fund health care.

12 comments:

dana said...

PLUS, anyone earning over $110,000 a year does not have to pay into social security. This plan was placed into effect "assuming" those people would be able to supply their OWN retirement plan. Someone forgot to put that last part into law. OR it's due to the fact that those making more, are in the position to pull the right strings.

Brother Tim said...

Americans have been totally consumed by avarice. It has eaten their very souls.

As Dana notes, Social Security deductions now max out at 110K. Up until the era of Saint Ronnie, most people would max out in 10 months or less. I can remember back 35 or 40 years, when I was only making $5.50/hr (probably equivalent to about $15.00/hr today) I would max out in 9 or 10 months, feeling like I got a raise for the remaining 2 or 3 months. Now you have to make roughly $50/hr to max out. How fair is it that some people today are allowed to max out in a month or less?

I don't understand America's resistence to proven successful methods used by other countries. It's as if we're saying, "If we didn't come up with the idea, it can't be any good". Our arrogance will usher in our demise.

This was a good post, Demeur, thanks.

Demeur said...

You also forgot that the tax rate for the wealthy when Ronnie was in office was 50%. Prior to that when Eisenhour was in it was close to 90%. Now when you even suggest raising it by 4% it's republicans on the war path. Then there's CEOs making 500 times the wage of an average worker.

J. Marquis said...

I like your idea, Demeur. The main thing is that once the money is collected, it absolutely has to go toward healthcare or education.

BBC said...

You silly boy, money never goes where it is supposed to go. And even if it did it wouldn't keep you alive. You're going to die, try to get used to that fact.

S.W. Anderson said...

Manufacturing is 17 percent or less of GDP. The great bulk of our manufactured goods are imported. I'm not sure how readily VAT adapts to other goods and to services.

This could be a way to help fund health care. My mind isn't closed to it, but I do have doubts about it being a comprehensive solution.

I've spent plenty of time learning more about our economic situation by reading several excellent books over the past year. One thing that comes through loud and clear in all of them is how thoroughly the wealthy, well-connected few and big-money business interests have tilted everything in their favor.

The top marginal rate should be no less than 75 percent, period. Any billionaire or millionaire who can't hack that should be welcome to leave, although if he plans on making it permanent and taking his worldly wealth with him, he's going to have to pay one hell of an exit tax (crying towels compliments of the house).

Corporate tax rates ought to go back up to where they were before Reagan's wrecking crew went to work.

Any person or business caught squirreling money away in an offshore tax shelter or hiding it in a Swiss bank account should be made to bunk in next door to Bernie Madoff for a very long time. No slap-on-wrist fines; hard time in the Iron Bar Hotel.

I expect within as little as seven or eight years, Uncle Sam — and the nonwealthy, not-connected rest of us — would begin to look and feel like our old, prosperous and cheerful selves again. And a million 20-somethings and 30-somethings could move out of Mom and Dad's to a place of their own, one they could actually afford.

S.W. Anderson said...

BBC, no one I know of is talking about immortality. A 45-year-old woman with breast cancer should get her chance to live another 25-30 years. Money for proper medical care can make that possible.

Demeur said...

On one of your last notes SW I see that the IRS is giving individuals until Oct. 15 to caugh up any taxes they owe. I sure hope that includes corporations as the Swiss have been kind enough to disclose many of their numbered accounts.
I also see the government is going after the Madoff crime family. To say they didn't know what was going on is BS.

Tom Harper said...

I like both the VAT and SW Anderson's idea of raising taxes on corporations and wealthy individuals. Nobody accused Eisenhower of being a communist when Big Business paid their fair share.

It's bad enough that the rightwing oligarchs have tilted and stacked everything in their favor. But even worse, every time they tighten the noose on the rest of us, they make it sound like it's always been this way. Anybody who even suggests restoring the tax rates we had when Reagan was president, is shouted down with "Communist!" or worse.

BBC said...

BBC, no one I know of is talking about immortality. A 45-year-old woman with breast cancer should get her chance to live another 25-30 years. Money for proper medical care can make that possible.

Not always my friend, not always, I've watched many young people die of cancer no matter how much medical care was tossed at them.

But even if we can save them my interest is in what they can and will contribute to society after they are cured.

I've also seem many of them cured and then they just sponged off the system for the rest of their lives while giving nothing back in return.

I call them bottom feeders. One of them died of cancer last week, I figure that the system is better off without him.

I liked him but he was still just a bottom feeder living off of everyone else.

I help others more in a month than he did all his life.

karim said...

Good one on wellness and it helps a lot.

Thanks,
Karim - Mind Power

S.W. Anderson said...

BBC, I said "possible," not guarantee.