Simplify the tax code?

A very common argument that echoes through the halls of Congress is that the tax code is too complicated. The number of pages that comprise the tax code are often lauded by Senators or Congressmen looking to get on television. Those that would like to see a flat rate tax often use the length of the tax code as proof that it is bad. But so rarely is this lengthly tax code explained to the American people.

Well, listen up. The reason the tax code is so long and complex is because WE the people have continued to support politicians who give us tax breaks/cuts based on things we and our families do. Things like tax cuts for energy efficient home renovations; paying student loan interest; paying mortgage interest; donating to charities; and all the other thousands of things that people are able to claim every year in order to save some money on their taxes.

Simply put, those thousands of pages of the tax codes are thousands of pages of ways we Americans can SAVE money on our taxes, and so any effort to "simplify the code" will undoubtedly be met with strong opposition and the accusation that those trying to "simplify the code" are plotting a tax hike for hard working families. Many of the credits are aimed at the middle class which explains why the regressive taxers (those that want a flat tax across the board) are so keen to "simplify the code" and eliminate these tax credits for working families in exchange for lower tax rates on the rich.

As with all things parroted around the capitol and on Cable News, it is important to understand what the buzz words really mean in order to figure out the right course of action.

What Robert Carroll and the WSJ don't understand about Health Care

This morning's WSJ article about Senator McCain's health care plan was dripping with so much ignorance and misinformation it almost made me cry. Carroll's main argument is that McCain's plan will reduce health care costs by encouraging people to purchase less expensive medical coverage. His comparison to home or auto insurance and his question of "Do these cover routine spending on cleaning the gutters or tuning up a car?" completely misses the point that health care is cheapest when preventative care is encouraged and provided. By covering only catastrophic incidents many people will opt out of seeking regular medical care that will ultimately reduce the overall costs of health care. The problem with health care costs aren't the actual care that Americans receive but the endless paperwork and insurance company make-work that is absent from most other industrialized countries, allowing them to spend less and live longer. To propose reducing health care costs by reducing plan coverage would be like saying you can have a car for less money but it doesn't come with an engine or wheels.

On top of this dismissal of preventative care, Carroll misses the mark on how the disappearance of employer provided health care will work in this country. One of the biggest obstacles to obtaining health care as an individual is the insurance companies' tireless efforts to screen out any risk. Individual insurance lacks the "market power" of an employer plan which leaves buyers more at the mercy of the insurance companies. An insurance company is not going to give people better care or lower costs out of the goodness of their corporate hearts so the collective bargaining power of a whole company can help ensure quality affordable coverage.

Dr. Carroll's comparison of the current tax subsidies versus the ones proposed by Senator McCain is flawed because he is comparing McCain's proposed plan (which he already noted would have higher deductibles and less coverage) against the current system. Therefore not only will people under McCain's plan be taxed on their employer provided health care benefits, they will also be paying larger sums out of pocket for care, which for many Americans will mean forgoing treatment they think they can live without. This is a horrific way to reduce health care costs.

I don't kow if Dr. Carroll simply didn't think of these issues or if he is cynically attempting to fool the readers of the WSJ but his analysis is fundamentally flawed. Senator McCain's health care proposal in the long run will reduce coverage, increase the price paid by consumers and force many companies to stop offering health insurance to employees, leaving many Americans with chronic illnesses or other health problems uninsurable. If you believe the GOP claims that they will force the insurance companies to insure the riskiest Americans then you clearly have not listened to anything they've said about the invisible hand of the market.