State tax collections nosedive
'One small step ...'

Healthcare surtax not progressive enough

That's a headline -- and taxation approach -- that's sure to kick the already contentious health care reform debate up a notch.

Frank Pasquale, writing in Concurring Opinions, says that beneath all the sturm und drang about soaking the rich with a health care surtax proposed in the House bill, the focus should be on three underlying realities:

"First, income and wealth vastly increased at the top of the distribution over the past thirty years — in part because of corporate cost savings that included denial of health coverage to millions of workers.

Second, inequality itself exacerbates the health care crisis, by fueling the allocation of medical care according to profit potential, not need.

Third, inequality causes health problems, because societies grow 'more dysfunctional, violent, sick and sad if the gap between social classes grows too wide.'"

The surcharge on the rich is not some random resentment inflicted by Frenchified Madame DeFarges on America's John Galts, continues Pasquale, who then elaborates on why the 5.4 percent surcharge is not progressive enough.

Some Dems don't buy it: Some Democratic lawmakers, however aren't buying the surtax proposed by their own party.

Twenty-one newly elected Representatives and one second-term House member last week sent Speaker Nancy Pelosi a letter opposing health care-related tax increases.

The income surtax on the wealthy, argue the Representatives, would place an undue burden on small businesses, some of which pay taxes as individual filers.

The dissenting Freshman members, who are worried about the taxes and other controversial aspects of the bill, also have had meetings with their party leadership, as well as a sit-down with Obama at the White House, according to The Hill newspaper.

Will this mini-revolt be enough to force changes in the House bill? Will it slow down the process, on both sides of the Hill, that the president wants completed in the next couple of weeks? Reuters has compiled a good look at some scenarios that would wrap up any health care legislation.

I think the before-August-recess time line is too fast for such major legislation. Getting a viable health care reform plan done right is more important than simply getting it done quickly.

Hat tip to TaxProf for Pasquale item

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