Nearly all Americans' taxes will go down under Medicare for All

Elizabeth Warren fumbled at the latest Democratic leadership debate when she was pressed on the question of whether Medicare for All would raise taxes, and she refused to answer, creating a soundbite that made her look like a sneaky, evasive politician, to the delight of right wingers who've struggled with her image as a straight-shooting, super-competent, quick-witted daughter of the soil.

But the question actually has a simple answer: under Medicare for All, most Americans will pay much lower taxes -- but the tax that will be lowered is the invisible payroll tax exacted by employers and remitted to giant, super-profitable health insurers.

Writing in the Guardian, Gabriel Zucman (previously) and Emmanuel Saez (co-authors of the new book The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay) demolish the argument that health insurance isn't a "tax" because you can choose a cheaper option: "There are cheap meals, there are cheap clothes, but there is no cheap way to treat your heart attack, to cure your cancer, or to give birth."

I am a donor to both Elizabeth Warren's and Bernie Sanders' campaigns.

The health insurance poll tax hammers the working class and the middle class. At the bottom of the distribution, it’s not as onerous as sales and payroll taxes. But that’s because many low-income Americans rely on a family member to cover them, enroll into Medicaid, or go uninsured. For the middle-class, the burden is enormous. Take a secretary earning $50,000 a year, who has employer-sponsored health insurance at a total cost of $15,000. In reality her labor compensation is $65,000 (that’s what her employer pays in exchange of her work), but the secretary only gets $50,000. The executive earning $1,000,000 also pays the same $15,000 for his healthcare. This is a terrible funding mechanism.

Funding healthcare via insurance premiums would be acceptable if this private poll tax was small. When the system of private health insurance developed initially, the cost of employer-sponsored health insurance was moderate, the equivalent of 0.5% of national income in the 1950s. Today, however, it is huge: 6% of national income, almost as much as payroll Social Security taxes. The Affordable Care Act increased the pool of Americans eligible for Medicaid and subsidized the purchase of private insurance for low-income people not covered by their employer. But it provided no relief for workers who fund their healthcare through a huge and growing poll tax.

This situation is not sustainable. Most countries have understood this a long time ago. Health and retirement benefits started, like in the United States, as negotiated arrangements between employees (represented by their unions) and employers. But the task of funding health and retirement was then gradually entrusted to the government. Private premiums morphed into regular taxes, based on ability to pay. In the United States, this transformation has not happened yet for healthcare – leading to the crises we are in now.

Make no mistake: Medicare for All would cut taxes for most Americans [Emmanuel Saez and Gabriel Zucman/The Guardian]

(Image: Senate Democrats, CC BY)

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