If you make big bucks — or enjoy alcohol, cigarettes and Coke — the government might hit you up to pay for fixing the nation’s health care system.
On Tuesday, the Senate Finance Committee peeked into vending machines and liquor stores, company payrolls and health savings accounts, looking for a mix of tax increases and spending cuts as a way to pay for a health overhaul — which could cost more than $1.5 trillion over 10 years.
Experts thought the big debate might be public plan vs. no public plan. But that may well pale in comparison to the difficulty of settling on a way to finance health care reform.
“I wish there were a number of painless options,” Robert Greenstein, executive director of the Center on Budget and Policy Priorities, wrote in his prepared testimony. “There aren’t.”
There appeared to be a bubble of support among the experts for taxing bad behavior, including a $2 tax on a pack of cigarettes and a higher excise tax on alcohol.
But soda and sugary drinks found a friend Tuesday in Sen. Chuck Grassley (R-Iowa), the ranking member on the Finance Committee.
He categorically rejected the idea during a conference call with reporters.
“No,” he said swiftly, when asked if there was any chance of taxing it. “I think, quite frankly, the only reason it’s being brought up is to get it shot down early so it doesn’t become part of the debate. I don’t think it’s going to have any legs at all.”
Still, it’s easy to see why the bad-habits tax was so tempting: Taxing tobacco, junk foods and alcohol could raise $600 billion over 10 years.
Lots of other options will also get a look.
People who like the tax-free status of their company health benefits could be asked to ante up. Money in the pot: more than $700 billion over 10 years.
Treasure the tax benefits from your health savings account? Some experts say the accounts encourage “excess consumption” of health services — and committee Chairman Max Baucus (D-Mont.) agreed they’re worth a look. Money in the pot: $60 billion over 10 years.
The committee is far from settled on any one option — of which Baucus said there are many. Each item, down to the snickerdoodle, has a lobby behind it, paving the way for weeks of horse trading as the committee stitches together a tax package.
A panel of economists presented the committee with a menu of scenarios, from wringing savings out of Medicare and Medicaid to cutting medical costs by reducing sodium levels in packaged foods and at restaurants.
Non-health-related items remain in the mix, including capping the deduction on charitable donations, which received a chilly welcome on Capitol Hill after President Barack Obama proposed it in his budget.
“The proposals that we have discussed,” Baucus said, “will not come easily. The reforms that we are planning are not cheap. ... Finding money that we can all agree on will not be easy.”
Baucus gave one of the clearest signals yet that limiting the tax-free status on employer-based insurance remains a serious option. Obama opposed it during the campaign and repeatedly went after Republican John McCain for making it the centerpiece of his health care plan. Labor unions are also against it.
Yet the idea is attractive because of the money it could generate: $250 billion annually if the deduction was lifted altogether. Baucus insisted a full repeal was not under consideration, but he said lawmakers must look at the deduction.
“I know that there is some controversy around doing so,” Baucus said. “But the current tax exclusion is not perfect. It is regressive. It often leads people to buy more health coverage than they need.”
Six of the 13 witnesses, including economists from the conservative American Enterprise Institute and the liberal Center on Budget Policies and Priorities, argued explicitly for the proposal.
Employer-provided health insurance is considered part of workers’ compensation but is not taxed as wages are. Proponents of eliminating the benefit say it is poorly targeted because it gives the biggest benefit to those with the highest incomes and is unfair because self-employed individuals don’t qualify for the same break. It also encourages individuals to buy gold-plated insurance plans that can drive up health care costs, experts say.
But a warning in the testimony from Gerald Shea of the AFL-CIO underscored why this option will be a thorny issue for Democrats. He said the idea could “disrupt the primary source of health coverage and financing for most Americans.”
29 comments:
this is stupid. this is big government. MORE TAXES. i mean if this get through what is next..
Since when is it the government’s role to decide what is "bad behavior"? I think that should be left up to the individual. I agree that our health care system needs help, but taxing things that people have negative opinions about doesn't seem quite fair. A two dollar tax increase on a pack? Come on.
Sigh. This is just one more example of how grossly over powerful our government has become. First the tell what we cannot ingest into out bodies (controlled drugs, alternative medicines, birth controls), then, when telling us didnt work, they made it illegal. Now, in order to flex their muscles further, they decide to vote on a tax on things that are unhealthy for us or "bad behavior". And all of this is derived from a spending bill that is such a perversion of the central government's rights as outlined in the constitution, it sickens me. Gone are the days where Americans can retain ALL of their unalienable rights, as the almighty and all-powerful government has deemed it "bad" for us. If i recall correctly, the government was never intended to have the right to enact laws with such blatant disregard for our rights or of the constitution.
i am of course against alcohol, but my dad isnt, and i know he'd be ticked to find out that theyre trying to tax it. and i love cokes and sugary snacks and i wouldnt want to pay more for those snacks, i dont this proposal!
I don't think that the idea of raising taxes on junk food and bad behavior is all that bad. If you really want your junk food and your cigarettes, you can put out a little more money to help fund a good cause. Maybe, if the taxes make people not want to buy cigs/junk food as much, there will be less medical problems (lung cancer, cholesterol, heart problems). A national health care plan will be so good for this country, so I think that these taxes are reasonable. (I think that a tax should be added on marijuana too-if it ever gets legalized!) I do not like any taxing on or the reversing of tax free health benefits.
Sure, the government needs money. Yes, the health care system needs improvement. But I do not think it is the goverments place to tell the people what is "bad" for us. While alot of money could be raised by taxing cigarettes and cokes, there are plenty of other places that the gvmt should look to cut spending first. The governments is simply getting entirely too involved in peoples lives and it is time to reevaluate just how much control they need.
the taxing thing has gotten a little bit out of hand. since they are taxing cigarettes because of the health issue, they might as well start taxing big macs. because that leads up to heart disease.
lets tax air too. oh and sunlight. why not? we voted all these guys in, so we wanted this. right?
The part about this issue which I find kind of annoying is that I'm pretty sure there would be complaining for a week or so, but afterwards everyone would just completely forget about the fact that the prices of “unhealthy” items were raised several dollars. It's not like the average American would support this tax increase, but at the same time, the people just want to consume whatever they want to consume, and the whole idea of "no taxation without representation," has sort of lost it's appeal to the unmotivated masses. Ultimately, it's just an attempt by the government to raise money in an effective way; I don't think it's about actually trying to help the health of the general public. Prices will go up, and everyone will go about their daily life continuing to smoke and drink and not pay attention, while the money raised will go somewhere no one will ever see…
Since it is impossible for health care reform to take place without adequate funding, I guess I'd rather the government increase taxes on alcohol, cigarettes, and soda than more practical things such as paper, tuition, and everyday household items. Alcohol and cigarettes are both highly detrimental to one's health and the new tax could discourage addiction. However, this could lead to bootlegging and increased crime rate-and poses the question of what the government will decide to tax next.
The government can't expect to tax everything that people regard as "bad" in order to help the health care system. It is just ridiculous. Everything we consume is considered bad in excess. Putting a tax on what might be unhealthy to us is just not the way to resolve our problems. The government should stop trying to control what we choose to eat and stop using the excuse that something is "a bad-habit" to try to make money out of it.
Man this is a tough one because we do need a btter health care system, but i don't know if taxing alcohol and cigarettes is the way to go. Why are they going to try to make a person who consumes alcohol even more angry before they get drunk maybe that is because they want those same people to stumble around with anger and impaired judgment. So this looks to me like an abusive government who is caring more about how to get money rather than a person's civil liberties.
I think that if they are going to start taxing cigarettes and alcohol, they should just legalize drugs and tax the hell out of those too. I mean, if they going to go in for all the things that send the message as "bad behavior" than might as well go for the mother load right??
I just find it really hilairious that we had the American Revolution over crappy taxes without representation in Parliament; taxes on stamps and sugar and tea. Well now we have our own government that is now deciding what "bad behavior" is for its people. And now they wanna tax our CANDY?! Is there someone out there representing me saying that a 2 dollar tax on a pack is ridiculous? If this goes all the way who knows what they're gonna do next....
I said it in the beginning, and I'll say it now. I'm 100% behind Obama when it comes to taxes. As long as tax money goes towards something beneficial, such as healthcare, I'm more than happy to pay whatever he dishes out. But if they're making a tax list of all the unhealthy things people eat, I think fast food restaurants should be the first ones to get hit.
This is the most ridiculous thing ever. The government is definitely abusing their power. There are certainly worse things out there than coke. Don’t you think they should be focusing on that?
I think the government is overdoing it now by telling us what we can and cant eat. Our diet should be cohsen by the person eating the food. the governments now trying to tell us whats "bad" for us to eat and taxing more on those "bad foods." Verry bad.
First of all, if they start taxing my Diet Dr. Pepper I will be infuriated! Haha
But more importantly, I understand the logic behind wanting to tax non-necessity items that people rapidly consume. Of course the they will make money that way! But the logic doesn't make it right. Like most people, I agree that the government does not have the right to try to control what we consume!
It's funny how the government never really thinks about decreasing spending and puts all their time and effort into taxing their hard-working middle class that keeps this country going! Give us a break!
If they need funding for health care, they could have used some of the money from the MOST EXPENSIVE INAUGURATION EVER to fund health care! I don't know, maybe I'm just crazy?
I think that its good that they put a tax on alchohol that could bring down the alchoholism rates..but i dont think that they should have put a tax on sugary snacks.
wow...its pretty ridiculous what is getting taxed. i mean cokes and what not? really... stupid government.
I agree with the goverment is going way over the line if Obama wants to remain in office he shouldn't go through this.
i agree that it isn the governments role to decide what "bad behavior" is, and to put a tax on somthing that may, or may not be unhealthy for us is waaaay sketchy
me personaly,thinks that taxing the alcohol sales isn't all that bad.Whether or not there is taxes on alcohol people are still going to buy it.
I woke up out of my sleep to blog!!! I have a job and i still do not have any money, what makes the government think i have money for the nation's health care system? I really don't mind the two dollar tax on cigarettes because i don't smoke (or drink) but tax on anything else and im going to live at home for the rest of my life!
Wow, America might just have a major improvement in the overall health of its citizens? We wouldn't want that. I think this is a weird way to approach improving the nation's health care system, it's better than restricting everything though I suppose. Might be a pointless attempt though.
This entire time I thought the U.S. was "Free" and now they are telling us indulging in a little food and drink is "Bad Behavior". What's next on their list of taxation?? I mean yeah excessive eating & drinking may be bad for your health but what is the government trying to do us here? Last time I checked we weren't living in communist Cuba.
That two dollar increase is killing me faster than the cigarettes are. Oh well... I ultimately think it could be a good idea. lower the prices on organic products and raise them on things filled with additives... I just don't know how the companies affected will react to this idea.
That's what is needed to assure the people that the economy is in a sort of stable condition, so that they know that we are stable enough to add even MORE taxes!
I think that the government is outrages to put taxes on certain items. I can understand alcohol,but on other stuff is stupid. Well depending on the item.
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