Tax
Policy to Support a Growing U.S. Economy in a Competitive Global Marketplace
|
Tax
Policy to Support a Growing U.S. Economy in a Competitive Global Marketplace
|
|
|
CENTER
FOR STRATEGIC TAX REFORM
|
|
TAX
POLICY WIRE
|
Volume 1, Issue 3, May 2006
|
|
There is a basic mismatch in the national debate on health care. On the one hand, the actuaries tell us that the Medicare program will run into very serious financial problems in the years ahead. In contrast, the public concern is focusing on the inadequacy of benefits and the lack of health insurance on the part of many Americans. In effect, the experts are saying that there is not enough revenue coming into the health care system, while the public is saying we are not spending enough. That is going to be a very difficult question of public policy to deal with. Unfortunately, there is no simple way of cutting medical costs. Of course, there is a certain amount of avoidable waste and more widespread use of information technology would make for both cost efficiency and perhaps fewer medical errors. Also, legal reform might reduce medical insurance costs. All that would help, but the major driver in increasing medical costs is technological advance. Let us remember that Americans are living longer. That is not merely good luck or adopting healthier lifestyles such as better diets. In this case, bigger is not better. Americans are getting bigger, or rather fatter. The real life extenders are those MRIs and other medical gadgets that minimize invasive surgery and enable physicians to successfully do procedures which were not feasible a generation ago. Let us not forget the medicines that cure or contain many diseases without surgery and the research breakthroughs that are increasing physicians' knowledge of our illnesses. They all have one characteristic in common: They are very expensive. After all, nobody wants to shorten his or her life in order to balance the health care budget. Rather, the general attitude is often, "I want the best possible medical care, especially if I don't have to pay for it." To summarize a great amount of professional research and writing on the subject of financing Medicare and health care, there are no simple or straightforward answers. It will probably take a combination of actions over a long period of time without any assurance that the problem will be solved. Some background information may be a useful start. The average citizen is not aware of or concerned about the financial status of the Medicare Trust Fund, or the rising share of GDP going to health care. Citizens worry about losing their health insurance, especially if they lose their job or if the employer cuts the benefits. That is becoming increasingly likely, with employees sharing more of the costs. However, all those factors are pressures to maintain demand for health care. So is the concern over those who lack health insurance. That makes dealing with the financial problem very difficult ... Read "The Never-Ending Dilemma Over Medicare and Social Security," USA Today Magazine, May 2006 |
|
|
|
|
|
HOW
MUCH DOES IT COST THE PRIVATE SECTOR TO PROVIDE GOVERNMENT WITH $1 IN
TAX REVENUE? Forget
about the idea that the cost of paying $1 in tax is $1. Even academics
on the left now acknowledge that taxes do have some dynamic effect on
economic performance. When taxes go up by $1, it is not just the private
sector's after-tax income that goes down; its pre-tax income goes down
as well. Thus, when the question is, "How much does it cost the private
sector to provide government with $1 in tax revenue?" -- the answer
is $1 plus the amount by which taxpayers' incomes go down because of the
negative effect the tax has on the economy. |
|
|
|
RAY
OF HOPE: There is reason for
hope and rejoicing at the Treasury Department. Deputy Assistant Secretary
Bob Carroll is moving forward effectively in establishing the Treasury's
first-ever Dynamic Analysis Division (DAD). When fully operational, DAD
will be able to predict and quantify with reasonable accuracy the effects
that particular changes in the tax code have on the economy. |
|
|
|
|
|
|
|
Questions or comments? Email us at info@cstr.org. |
