The U.S. House of Representatives will likely vote tomorrow to continue about 50 expiring tax incentives known as “tax extenders.” It must do so each year to prevent significant tax increases for some taxpayers.
This year, however, the House will likely pass increases in other taxes to offset the supposed cost of the tax extenders. This is nothing more than Congress hiding behind the guise of fiscal discipline as an excuse to raise taxes year after year. Continuing the tax extenders is not a tax cut. It is the prevention of a tax hike. Therefore there is no need to raise other taxes to pay for them.
The yearly dance Congress goes through in regard to paying for the tax extenders is the result of a faulty revenue baseline constructed by the Congressional Budget Office (CBO). The flawed baseline impacts debates about the Alternative Minimum Tax (AMT), the death tax and others. It prevents the permanent extensions of these important tax reductions and puts many taxpayers at risk for steep tax hikes each year. Congress should require the CBO to correct this flaw to its revenue baseline. That way it will not wrongly seek to raise taxes to continue current tax policies like the tax extenders, the AMT, the death tax, and others.
Regardless of the CBO baseline problems, Congress should not pass tax hikes to pay for extensions of current tax provisions. This applies to the tax extenders, the death tax and any other expiring tax reducing provisions that are part of current policy.
The Washington Post and New York Times both have front page stories out today on Sen. Kent Conrad’s (D-ND) co-op fall back for President Barack Obama’s imperiled public plan. The NYT reports: “The history of health insurance in the United States is full of largely unsuccessful efforts to introduce new models of insurance that would lower costs. And the health insurance markets of many states suggest that any new entrant would face many difficulties in getting established.” WaPo reads: “There are at least two major health-care organizations that could serve as models for Congress: HealthPartners in Minnesota and Group Health Cooperative, based in Seattle. They employ physicians and own health-care facilities, giving them greater power to control the delivery of care.”
HealthPartners and Group Health Cooperative are both high quality integrated health systems much like Intermountain Health in Colorado and Mayo Clinic in Minnesota, which have both been praised by President Barack Obama. These are all wonderful health care systems which can serve as models to other providers. But the reason they are so hard to replicate is not because of too little government intervention, but because of too much.
Like all health providers today, these entities are all subject to the perverse tax incentives and regulations that blunt all innovative systems. Each are subject to state (and federal) mandates that push up costs and a federal tax code that forces them to be primarily employer based plans. Real health care reform would mean restructuring the tax code to decouple health insurance and employment and encouraging states to drop costly mandates that drive up health insurance costs for everyone. Once freed from cookie-cutter federal and state regulations, Americans would be much more likely to see new enterprises like HealthPartners, Group Health, Intermountain, and Mayo, be established, expand, and flourish.