Washington Post: Mitt Romney Tax Plan 'Garbage'

Quote from Epic:

I would propose a completely different tax system than our current. One that would eliminate the problem of declining real income and at the same time accelerate growth. I believe if done right it could be revenue neutral also.

Coming from an obscure blog I read a while back.
5% --- Land Value Tax (unimproved land value only)
10% -- Retail Consumption Tax
20% -- Capital Gains Tax (no differentiation between LT vs ST)

Very few exemptions or deductions.

0%---
Corporate
Income
Estate
Repatriation
Property
Etc..

Pair this with a dramatic overhaul of the health care system with the following points.

Mandatory health savings account contribution between 7 and 10% of income to be invested by the individual in much the same manner as current qualified plans. Based on age and family situation each HSA would have a required minimum balance that the individual would be working toward. Once that minimum had been passed, the surplus funds are free to be borrowed against interest free with a 20-50 year amortization.

Corresponding HSA to be provided by private insurance corps, but with a minimum annual deductible of $10,000 and a stop loss around $50K. HSAs with a $10K deductible are very cheap, and the idea is for each person to have to actually withdraw from money that they have saved to pay for medical bills.

Medical centers and pharmacies forced to make publicly available (including online) the expected cost of typical treatment as well as provide good faith estimates up front before admitting patients (excluding emergency care). Private online services free to setup cost comparison apps and websites to rank and review value of all health facilities.

In order to assist with health expenses for the poor, a voucher system or HSA supplementation is suggested to be the most efficient method.
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I like these ideas very much, especially the cost containment features, e.g., you pay directly out of your HSA,(no third party) and the price shopping. Those would be great steps forward. Ultimately more might be needed to break the stranglehold of the medical cartel, but what you suggest is not too complicated (best feature) and moves in the right direction.

I also like the tax proposal -- that would be fought, I suppose by, tax accountants and tax lawyers. It seems it would move us gradually, without chaos, toward less wealth polarization. Something highly desirable for social stability in a modern democratic republic, in my view.

Incidentally, some states already have prescribing pharmacists. I favor all states licensing prescribing pharmacists. This can be, if done right, a major contributor to cost reduction. Much of the world has prescribing pharmacists, by the way. That is, trained pharmacists that can prescribe a wide range of medications for common, easily identified maladies that do not require a physicians involvement nor that the patient be monitored.
 
Not much on the specifics of the overall plan for the economy. I must ask, isn't this a bit like saying we have to pass the bill first to see what's in it?

What you’re going to see is a campaign that has clear direction, but not a Simpson-Bowles or Ryan-budget level of detail,” the Romney adviser said. “It’s not only politically unwise to do that, but it’s not how the voters engage in a presidential campaign.”

http://www.politico.com/news/stories/0812/79814.html

It's not how the voters engage? No, it's not how THEY want to engage the voters.
 
1. if we were to cut personal income tax entirely... I guarantee you an expansion for the record books - absent WW 3. But even if we only cut taxes a bit...

2. if you cap govt spending... there is no need to cut jobs... or do anything different... govt would just shrink on a relative until the budget is balance, but we were hardly no its happening the govt employees would just find that over time... instead of living like the doctors in the area, they would have to live like the small business owners. But so what govt is too big right now. we are borrowing 40 cents of ever dollar and and for every dollar in debt we only get a small increase in GDP.... our govt is already far to big a part of our economy.

3. As Keynes stated... we are going to cut income taxes... every percent or 2 will allow more an more investment dollars to go into start up business. we will cut and cut some more until it happens. Because as I said... if you were to cut personal income tax to zero... we would have a massive expansion... everyone would have more dollars to invest or spend.

4. by the way... with the govt deficit spending -- its just a question of whose ox is getting gored... right now we are destroying private workers and business owners savings and utility of income with ever increasing govt spending... so net net... my plan would most likely stimulate more growth than inefficient govt deficit spending.

Quote from piezoe:

Jem, It seems Epic made some very good points that you might consider.

You're proposing to cap spending in nominal dollars and decrease, via tax cuts, revenues in deflated dollars relative to a pre-tax-cut baseline. This will, as you say, eventually bring a sort of "balance," but it will be nominal, "capped" budget dollars balanced against inflated revenue in deflated dollars. The governments buying power will decline, unless growth in revenue exceeds inflation, in spite of tax cuts. And how is that possible in the absence of Republican magic? As the government's buying power falls against ever inflating prices, the government sector will shrink --something you would find desirable-- but unless the private sector grows apace to compensate, the country will be thrown into ever deeper recession as both government and private sector jobs are lost, along with subsidies of the private sector, i.e., government spending in the private sector.

Since you propose, in effect, to shrink government and its buying power along with its subsidies of the private sector, what is your plan to sufficiently grow, in real terms, the private sector to compensate and to avoid deep recession or depression in the economy? Or are you taking the Greenspan approach and relying on the forces of unfettered, i.e., unregulated, markets, to return balance to the economy, just as the unfettered markets of 2008 began to do before the government stepped in. :D
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2 dollars and 42 cents of govt debt for every dollar of GDP.

This is why we don't want the govt to grow....


Bottom line: in Q2, the US added $274.3 billion in debt while adding $117.6 billion in GDP (from the revised data: Q1 GDP of $15,478 billion rising to just $15,595 billion in Q2). Probably what is more indicative, is that in Q2 the delta change between debt and GDP rose from 2.28x in Q1. But that too is largely noise and will be revised. What won't be revised is that over the past two years, the US has added 2.42x more debt than it has added GDP.
http://www.zerohedge.com/news/q2-am...t-every-100-gdp
 
Quote from piezoe:

I like these ideas very much, especially the cost containment features, e.g., you pay directly out of your HSA,(no third party) and the price shopping. Those would be great steps forward. Ultimately more might be needed to break the stranglehold of the medical cartel, but what you suggest is not too complicated (best feature) and moves in the right direction.
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Yes, I believe that at this point someone needs to recognize that our health insurance system is not the solution to the problem. The current insurance system is one of the major causes of our problem. I'm tired of politicians saying that there are millions of people without health care, when they really mean that there are millions without health insurance. They then take action to get these people insurance, rather than care.

We must acknowledge that the pricing mechanism in our health care system is broken due to lack of adequate information for the consumer, and a third party payment system that eliminates consumer involvement in pricing. Like I said before, free markets only produce the fair price for goods if both the seller and consumer have adequate knowledge before the transaction takes place.

Our real issue is that we must reduce the cost of care, not the cost of insurance. Try going into a physician and asking how much your visit is going to cost you. They will not tell you anything outside of what your co-pay will be. If you have insurance, they bill everything at the highest amount they can and sometimes for services that weren't performed or completely unnecessary. If you don't have insurance then they frequently cut the bill in half or more.

I should be able to know before treatment what the estimated cost will be. They try to fall back on the crutch that it is hard to know what will be involved in treatment. Well, the same applies to auto mechanics, but I still get estimates up front. They don't simply do a bunch of work and send an outrageous bill to my insurance company. For the vast majority of treatment everything is very standard and estimates are completely possible after the initial diagnosis.

I should also be able to get on my iphone and compare the cost of local clinics as well as reading reviews about quality of care. This allows me to price shop and then when I get billed I now have to pay the bill out of a savings account that belongs to me. There is a strong incentive for me to build up that savings account as I will be able to use it to purchase a car, pay college tuition, etc.. if it is large enough.

I believe these measures would dramatically reduce the cost of health care almost immediately.

I also like the tax proposal -- that would be fought, I suppose by, tax accountants and tax lawyers. It seems it would move us gradually, without chaos, toward less wealth polarization. Something highly desirable for social stability in a modern democratic republic, in my view.
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The idea of the various parts are this.

LVT- This tax encourages the most efficient use of land. There is a disincentive for anyone to hold valuable land in a vacant state simply speculating on a future increase in value. It thus reduces urban sprawl, lowers the cost of food by encouraging more production, and helps to even out the real estate market by reducing the likelihood of speculative bubbles. Anything higher than about 10% would be tough to handle, but I think 5% is ok, especially since it is only on the unimproved value. There are many places right now that have a 2% property tax on the entire property value, which is most time more than a 5% tax on land only.

Retail Consumption Tax - The merits of this tax have been well argued by the "fair tax" supporters. Pay directly for exactly how much of the system you use. I like pay for use taxes. Puts the consumer in control of how much tax they pay. Unfortunately, these usually hit the middle class the hardest, and I think the 30% rate that the fair tax guys support is absolutely absurd. Which brings in the third tax.

Capital gains - The argument here is that capital gains (including real estate appreciation) are windfall profits based on the efforts of others rather than the direct efforts of the person receiving the gains. This is not possible without a system to invest in. Most data supports the idea that the ideal rate for capital gains is around 20%, where people aren't discouraged from investing and it isn't worth the risk of trying to evade. This also helps to ensure that the very wealthy, who pay only a small fraction of their income in sales tax, would help to shoulder the tax burden.

I think the blend is very nice, and like you said, the simplicity is wonderful.



Incidentally, some states already have prescribing pharmacists. I favor all states licensing prescribing pharmacists. This can be, if done right, a major contributor to cost reduction. Much of the world has prescribing pharmacists, by the way. That is, trained pharmacists that can prescribe a wide range of medications for common, easily identified maladies that do not require a physicians involvement nor that the patient be monitored.
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Agreed
 
A lot of conservatives go on about HSA's and competition, etc, but I have to say it's nonsense. I suppose people who have never had any contact with the health care system imagine these are good ideas, but in reality they will not work.

First off, we are not back in the 1800's when the good ole doc would swing by the farm, and you could give him a couple of chickens or a pig or whatever you agreed on. We have a far more sohpisticated system in which insurance companies do the bargaining for us. They have every incentive to get the lowest prices, plus they have clout that individual patients can only dream about.

The idea of medical savings accounts makes sense only because of the idiotic way the tax law treats employer-provided insurance. The problem with MSA's is that the way they work now, you lose the money unless you use it. If you could save it your entire life and convert it to your IRA anytime youwished, i would say good idea. To have to estimate every year what you'll need is idiotic and wasteful.

I do agree that there should be fairly significant copays for everything insurance covers. You should be able to choose a health plan that trades a high copay for lower premiums. The idea, enshrined in Obamacare, that patients should not have to pay anything, at least for certain politically favored items, is ridiculous. It encourages waste.

The main problem with insurance is that it is only offered state by state. If you allowed national risk pooling and a wide variation in plans, it would be far more efficient. Why should patients in smaller states or in areas with a lot of unhealthy people be penalized? Why should I be forced to pay for coverage for substance abuse, accupuncture or weight loss therapies, just because those groups managed to buy off some state legislators who wrote it in as a mandate?

The main additional problem with insurnace is the cross subsidy issue. Obamacare unfortunately excacerbates that by preventing insurers from basing pricing on risk factors like age and health. It socializes risk but dishonestly forces the insurance companies to collect the subsidies.

The headline issues have been free riders and preexisting conditions. Who pays for the uninsured illegal alien who shows up at the ER? Or the young person with no insurance who gets HIV? There are three possible approaches. One, let private charity deal with it. This was the way things worked for a long time, but that was before the government created a massive underclass who expect to be treated like farm animals and have their every need provided by someone else. Second, the government can pay for it. Third, healthy people can bear the cost by paying excessive rates themselves. Currently, we have a combination of the latter two approaches.

Personally, it seems to me the fairest way is the way Romneycare handled it, by requiring some form of coverage or payment of a hefty fine. Done nationally as in Obamacare, I think it should be unconstitutional, but the Supreme Court said otherwise.

Conservative painted themselves into a corner by bellyaching so much over the individual mandate. Yes, there was a very real constitutional issue, but since when has individual responsibility been a problem for conservatives?

As for immigrants who can't or won't pay, I would treat them then deport them. If they can't pay the fine, even if they are legal, out they go. They are a drag on our country and we don't need them. Boo hoo.

The real problems of the health care system are the high costs of new technologies and expensive end of life care. Tough issues that Obamacare dances around, at least for now. I don't trust the govenrment to get them right either. There is a huge difference in denying an 80 year old a hip replacement and doing major surgery on a terminal patient to extend their life for a few days in ICU.
 
I don't think you are being completely fair. There are a lot of people who are familiar with the health care industry. It is fairly obvious to me that the pricing mechanism is broken, not the payment mechanism.

I don't at all agree with the premise that our system is "too sophisticated" to allow people to have an active role in determining pricing. Frankly, it drives me crazy that consumers have handed over all responsibility to insurance companies who don't always have proper motives. Our system provides massive incentives for waste.

It is simply untrue that insurance companies do an incredible job at negotiating pricing. The do an incredible job at establishing their premiums at a point where even with a wasteful and mis-priced system, they will still be able to make money. They are great at avoiding covering the catastrophes that people really need coverage for, while completely covering runny noses and sore throats that people should be paying 100% out of pocket for.

IMO, when it comes down to it, the biggest problem with our health care is a broken pricing system that has the consumer too far removed and uninformed regarding the cost of consumption.
 
I quite agree with Epic that among the many defects in the unacceptable U.S. healthcare paradigm is the pricing mechanism. We have more or less endless debate over ways to pay but way too little debate on how to bring prices down to levels consistent with other industrialized countries.

To add to the overall debate I want to throw out some additional food for thought. And this is something that I have not seen much discussion of.

In the U.S., a typical citizen either pays simultaneously for BOTH private medical insurance -- directly,or indirectly via an employer-- and for medicare for ones entire working life, right through retirement up until death. After retirement medicare supplemental insurance replaces the policy that protected one during one's working years, and medicare payments continue right up to death (they don't stop upon reaching age 65 as the naive would suppose!)

If you add all this together and include any reasonable amount of compound interest your going to come up with a large number, roughly in the neighborhood of 1 million dollars -- a little more, a little less depending on circumstances.

I believe the NY Times had an article for which they had calculated typical medicare contributions over a lifetime. They also found that by far the largest medical costs accrued during ones final months of life, and that was something on average in the neighborhood of $500K. (I'm recalling this from memory, so there could be some errors here.) Anyway, I think the conclusion was that it was these last few months that were the main cause for a medicare shortfall.

My thoughts on this are that something is drastically wrong:

1. We are already contributing what should be enough on average in 2012 dollars (~1 million!) for a lifetime of top notch medical care;

and,

2. There is a huge, unrecognized subsidy of the private insurance companies by U.S. tax payers. The insurance companies are, by and large, insuring the low risk years up to age 65 with high premiums, and providing only limited supplemental coverage during the higher risk years after age 65, at lower premium of course, whereas the taxpayer is assuming nearly all the risk during the high risk years!

All I can say is, WOW! what a good deal for Blue Cross and Blue Shield!!!

(I'll try to find a link to the NY Times article)
 
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