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Sunday, July 12, 2009

How To Pay for Health Care

Nate Silver writes:

The big news on the health care front this weekend is that House Democrats are prepared to call for a tax increase on the highest-earning Americans in order to pay for expanded health insurance. Although accounts of the exact details differ slightly, it appears that the tax hike would take the form of a "surcharge" of 1 percent on incomes from $280,000 to $400,000, 1.5 percent on incomes of $400,000 to $800,000 and 3 percent on incomes of $800,000 and above. This means that someone making $500,000 would pay about an extra $2,700 in taxes each year, and someone making $1,000,000 would pay an extra $13,200. The burden, in other words, would fall disproportionately on those who earn not just in the six figures, but rather in the seven figures, for whom much more of their income would become subject to the 3 percent rate.

I applaud the House for recognizing that the world doesn't end at $250,000 or $357,700 (the beginning of the top marginal income tax bracket as of last year). Throughout most of American history before Reagan, the top tax bracket kicked in at figures much higher than $357,700 in today's income: the equivalent of about $75 million in today's dollars, for example, during portions of FDR's presidency.

link: FiveThirtyEight: Politics Done Right: Taxing the Rich: The (Politically) Smart Way to Pay for Health Care


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