Counting Up On Payroll Taxes…15%…18%…How Much Will Be Enough to Finance Green Mountain Care?

By Alice Dubenetsky

Governor Shumlin was absolutely correct when, during a recent interview on the public access show “City Room” he said that opponents are going to nail his proposed payroll tax to finance Green Mountain Care, Vermont’s impending single-payer health system, as the biggest tax increase in Vermont history.

What started out as an unacceptable 15% payroll tax proposed by the infamous Hsaio Report on Achieving Affordable Universal Health Care in Vermont has suddenly and predictably risen. The Governor now believes that an 18% payroll tax would be a good starting point. The tax will be split between employers and employees, and every business and working person in Vermont will have more of a burden placed upon their budgets, because more of their hard earned dollars will flow into the state’s coffers instead of into their business or household accounts. This expropriation will serve to finance a single-payer health care system that our legislature and governor are anxious to impose upon a state with just over 600,000 souls. How many of those 600,000 individuals are actually in the labor force? The population figures from the U.S. census include all members of Vermont households, not just working adults.

Not content with Vermont Health Connect, the healthcare “market place” that the state will set up under the Federal Affordable Care Act, the Vermont legislature is determined to forge ahead with their socialist dream, their utopian goal, to become the first and only single payer system in the nation by 2017. Yes, right here in Vermont – a rural state without anything resembling the enormous tax base that it would take to support such a scheme without destroying our fragile economy.

Governor Shumlin touts the reduction in health care costs that will be paid by employers as a fair exchange for adding this tax. According to him, it’s just a little switcheroo in how their dollars are spent on health care. What he conveniently forgets is that currently many employers cannot afford to offer health care, and those who do often make difficult annual choices about the levels of coverage they can sustain and still maintain enough profitability to stay afloat. Now the governor purports to seize an across-the-board sum from these employers, regardless of their business models, profit margins, or employee status. Further, he also plans to seize a lesser, but still substantial amount, from the employees, also regardless of their circumstances. “The question is how to ratchet in the folks that are paying nothing slowly enough so it doesn’t hurt their bottom line,” said Shumlin

The problem with the Governor’s plan is that it is confiscatory and arbitrary. It is a one-size fits all, big government money grab to finance a health care scheme that is poorly conceived, the obvious fiscal and political consequences of which he has dodged from one election to the next out of a well-based fear that the citizens are not going to like the mess they are about to be handed.

It’s not a long-shot, given the redistributive bent of our current crop of legislators, that this tax will eventually become progressive, as well, because they will need ever more money to satisfy the beast that single payer will become as waste and abuse take hold, and as high income residents and profitable businesses choose to relocate to avoid the consequences of such irresponsible policy and policy makers.