Joe Biden wants the middle class think they’re safe from his tax hikes. Although he admits he plans to raise taxes over $4 Trillion, he promises only those earning above $400,000 need worry.
Lanhee J. Chen and Daniel L Heil, writing in The Wall Street Journal, warn the middle class this promise can’t be kept if the Public Option is added to ObamaCare. The Public Option is a government-offered alternative to healthcare insurance for those who don’t qualify for Medicaid, but can’t afford private insurance.
This is a subtle, but effective, means to a long-term goal of complete government take-over of healthcare. Rather than announce an immediate plan for socialized medicine, like the Medicare for All plan of Senator Bernie Sanders, Biden wants you to believe this is just another option for low-income Americans. He doesn’t want the 180 million Americans on private health insurance to worry.
But a Public Option plan will eventually eliminate all other competition in the marketplace. The reason is simple: the Public Option plan can lose money and still be viable because the government will simply pick up the losses by raising your taxes. (see Public Option Kills Private Insurance.)
How much will the Public Option raise your taxes?
Now we have an answer to that question. Chen and Heil tell us:
“With our co-author Tom Church, we estimate that a politically realistic public option would increase 10-year federal deficits by almost $800 billion. Over the long term, it would become the third-largest government program – accounting for one-eighth of future spending excluding interest on the debt. Keeping a public option deficit-neutral would likely require a broad-based tax increase that would add thousands of dollars to a typical middle-income family’s tax bill. Without the tax hike, the public option alone would increase the federal debt by more than 30% of gross domestic product by 2050.”
They point out such an increase in the federal debt couldn’t come at a worse time. The federal debt has risen above 100% of GDP 10 years sooner than expected, due to the viral pandemic, and the Congressional Budget Office now projects debt to reach 195% by 2050. The higher debt will mean fewer economic opportunities for future generations as more tax dollars must be used to pay the debt rather than provide taxpayer services. All this while another Covid relief package is currently under debate in the Congress.
Chen and Heil estimate that Congress would need an across-the-board tax increase of 10.4% beginning in 2026 to return long-term debt projections to CBO’s 2019 forecast. This tax increase would apply to all corporate, payroll and personal income-tax rates, and it would come on top of the scheduled tax increases from the expiration of the Tax Cuts and Jobs Act of 2017.
As usual, Biden claims that tax hikes on the rich will be sufficient to pay for his new programs. But the math just doesn’t add up. Again, Chen and Heil:
“Even before accounting for his other spending proposals – such as increasing ObamaCare subsidies – a public option would require record high tax increases on corporations or high-income taxpayers. We estimate that to pay for the public option, corporate tax rates would have to rise from 21% today to 58% over the next 30 years. Alternatively, Congress could raise the top three marginal tax rates. But between financing the public option and keeping debt below 150% of GDP, the top rate would eventually exceed 60% – higher than at any point in the past 40 years. . . Taxes for the typical middle-income family would rise by an inflation-adjusted $3,900 to pay for the public option and keep debt below 150% of GDP in 2050.”
One of the first things we learn as adults is “there’s no such thing as a free lunch.” You can be sure everyone’s taxes will be higher under a Biden presidency – and you’ll lose your private health insurance eventually as well.