A Funding Problem

(Editor’s note: The following Commentary is from a Caledonian Record Editorial on December 12, 2012, which they graciously granted permission to re-print)

The Vermont Workers Center, mostly if not entirely funded not by workers, but by liberal foundations, has made public its 17-page report on how the legislature should finance Green Mountain Care. Let’s give them some credit: the report is a conscientious effort to explain the principles upon which socialized health care ought to be “equitably” financed.

The VWC report argues that “financing of health services or ‘benefits’ must be based on health needs, with resources allocated to match those needs. Resources must be sufficient to meet all healthcare needs that are medically necessary, and allocated in a way that does the most good for the health of the people of Vermont.”

This goes to the heart of socialized medicine. Indeed, somebody needs to decide what your health needs are. Somebody must decide which of them are medically necessary. Somebody needs to extract the resources from taxpayers to pay health care providers to meet those needs, And Somebody must allocate those resources to those needs at payment levels established by that same Somebody.

In case you were curious about this Somebody – it’s your state government, in the form of the Green Mountain Care Board. If the Board doesn’t agree with your idea of your health needs…. You can always call your legislator. That’s real accountability!

The VWC report says that “Public healthcare financing through progressive taxation ensures that financial contributions are made according to ability to pay. Financing mechanisms that do not account for ability to pay (user fees and premiums) and are regressive (indirect taxes such as sales, consumption and sin taxes) should not have a role in healthcare financing.”

So where will the tax bite hit? “Primarily through the progressive and direct taxation of income and wealth, both individual and corporate, and through addressing loopholes and inequities in the current tax code. To ensure that contributions are based on ‘ability to pay,’ our proposal directs special attention to capturing income not related to payroll earnings, i.e. unearned income and wealth.”

Once this array of new taxes – at least $3 billion worth – is safely in place, tax rates would be increased or decreased (fat chance!) “through a regular, automatic adjustment without legislative intervention, up to an agreed threshold. “ Don’t even bother calling your legislator on this one.

The obvious socialist new tax solution is the wealth tax. The VWC likes the French “Solidarity Tax on Wealth”, which taxes the aggregate value of all of a rich taxpayer’s assets, located anywhere in the world, “as it is more reliable at focusing on extreme wealth than any attempts to tax the flow of income.”

The VWC report regrettably ignores a few key questions. What tax rates on personal and corporate income, capital gains, and net worth would be required to enable the Green Mountain Care Board to adequately cover the health care costs of up to 621,000 Vermont residents?

Which wealthy individuals, who now pay the great bulk of Vermont’s income taxes, would, facing those tax rates, remain in Vermont to be picked clean to finance another socialist dream urged by a liberal governor and his backers at the Vermont Worker’s Center?

And which rich liberal icons – Ted Turner, Barbra Streisand, Alec Baldwin, George Soros – would rush to establish residence in Vermont to joyously contribute their wealth to this historic project? A good bet is none of the above.