Way back in 1913, the government decided to start an income tax system to help pay for its expenses. This new system taxed only the very rich, affecting only 1% of the population.
The government is much like a child with a dollar bill. With the money in-hand and shiny things abound, that dollar will be spent. Two years later, the tax percentage was raised and the income amount lowered, making 5% of the population now pay into the system.
Eventually the government said “Holy crap! This is a great way to make money!” They then decided that everyone who wasn’t barely scraping by would be taxed. Lo and behold, we’re where we are now.
What started out as a system to take advantage of the rich turned into a system that now hurts the middle class the most. Low-income families are unaffected since they simply don’t pay in; and the rich work with the system to lessen their tax burdens. When all is said and done — between income tax, sales tax, consumption tax, luxury tax, tourism tax, and all the other taxes that pull from your paycheck — the middle class loses 50% of their salaries.
There’s no secret that the upper class pays less in taxes. With our engrained socialist outlook, it doesn’t seem fair that they’re paying so much less a percentage when they make so much more. But here’s a secret of the rich: they find ways to work with the current laws to benefit themselves.
It’s a different mindset than what the middle and lower classes have, and it’s also the kind of thinking that probably got them rich in the first place. Instead of just accepting one’s crappy circumstances, they’re stepping back, thinking the law through, and creating new ways to help themselves. In turn, while acting lawfully and within their rights, corporations owned by these rich people lessen their tax liabilities and also provide jobs — jobs that are eventually taxed at 50% for the middle class.
When the government starts talking about mandates to business, it makes me cringe. It’s not just my libertarian pull that makes me whole-heartedly believe that business should be left alone to run their own issues, but I also recognize that business owners will find a way to make mandates favorable to them.
In the case of raising the federal minimum wage, business owners are likely to invest in efficiency consulting to improve business processes, which results in pushing jobs to offshore sites and using layoffs or attrition to reduce overhead. If this isn’t enough or a viable option, they simply raise prices and pass that along to the customers.
A simple example would be grocery stores having to pay all cashiers higher wages. As soon as notice is given, owners invest in more self-checkout lines, and natural attrition is used to reduce the number of workers, where none are hired in their places. For those who still have a job with the grocery store, their $400 a week may seem like a bump, but when milk, bread, and cereal costs more to make up for the added expenses, is it really a bump at all?
Besides the added cost on the consumer side, choices are also limited. Continuing with the grocery store example, why would they employ deli workers to provide service to the counters? Instead, one employee can cut several days’ worth of meats and cheeses, seal them in cellophane, and leave them in refrigerated cases in half-pound increments. If you want a quarter pound of muenster cheese, you’re out of luck. A half-pound it is.
The latest issue that’s spinning my head lately is the Democrat-argued insistence for a universal healthcare system. Namely, Senator Clinton’s proposed plan mandates that all Americans purchase health insurance.
Being told that something is mandatory reminds me of my high school’s founder and operator talking about school-wide meetings: “This isn’t mandatory… But it’s not optional either.”
Clinton’s verbiage, though, takes no literary flowery side-steps: it is hereby dictated that you must purchase health insurance.
Insurance is essentially a gambling program. Whereas some people bet that they’ll become sick, I’ve spent much of my adult life betting that I won’t. As someone who is responsible for my own actions and trusts my ability to make sound decisions, for years I chose not to carry a traditional healthcare insurance policy. Because I’m young, healthy, and have a family history that says I won’t be afflicted with anything until I’m way, way older, I chose not to spend $200 a month on a plan that gives prescription benefits, regular checkups, and comprehensive care. To protect the assets I did have, I took a $50-a-month gamble for what amounted to hit-by-taxi insurance.
In the case that I decide that I don’t want any form of insurance, the plan calls for automatic deductions from my paycheck to provide me a plastic card for something I may never use. How is forcing me to pay for something I don’t want — and something that benefits only the individual — legal?
One thing that a Democratic presidential candidate never wants to be associated with is the supposed Republican attribute of benefiting big business. At a price tag of $110 billion (with a B, not an M) per year, how is this not tossing money — and ultimately control — into the coiffeurs of insurers, healthcare providers, and drug companies?
If everyone must have insurance, what’s to stop the industry from complying with the natural laws of supply and demand? When given an unlimited number of patrons, services can cost whatever insurers dictate. Mean eyes from government officials won’t suddenly convince insurers that they should charge rates that match the standard cost of living. This is a business — just like any other — that concerns itself with profits, losses, and the bottom line.
Businesses outside the healthcare industry will be hit by this mandate too. Businesses will be charged a per-month, per-employee charge (approximated around $300) if they don’t offer their own plan. There are several fall-outs from this.
In the case of smaller operations, companies can choose to just not have employees. Whether they make everyone a 1099 contractor or just pay under the table, both of these lessen the income tax contributions from all.
If $300 is cheaper than what’s currently given, companies can decide to quit offering their current healthcare plans. If the government is going to do the work for them in finding adequate plans and save them money while they’re at it, what’s the incentive to offer insurance?
Well, one incentive would be to make kick-ass health insurance a real (instead of expected) benefit. However, this will make it so the companies that choose to do this can pay lower salaries to potential employees. Much like working for Google, if you want free soda, a foosball table, and a job where you get to constantly work with the coolest up-and-coming technologies, you’re going to be paid under market.
I understand that healthcare is a concern for many Americans. One poll from NPR, the Kaiser Family Foundation, and the Harvard School of Public Health says that people genuinely care about a solution and generally support the idea of a socialized system.
Much like taxes, socializing medicine will again hit the middle class hardest. The upper class will employ techniques such as the ones mentioned above to avoid the program’s liabilities, the poor will continue to receive free services, and the middle class will be the ones stuck with the bill. When monthly premiums and the federal tax dollars dedicated to covering the $110 billion needed each year come up short, where will funds be drawn from? That’s right: taxes will increase. And as demonstrated in my initial discussion, we know who pays those tax dollars.
Instead of this mandatory plan, I instead ask what’s wrong with sitting down with major companies, negotiating a way to control costs, and then passing those savings onto the people? As a business person, I’ve always had success when I opened communication lines and approached discourse seeking a win-win end point. Because I use my own and my investor’s money, I’m especially cognizant of my fiduciary commitment to protect these stakeholders. Unlike the government, I cannot rely on raising taxes when my money falls short in achieving my end goal.
Because mandatory universal healthcare harms the very people it’s aiming to protect, it is not a viable solution that we should support. If you value having choices in your healthcare decisions, Clinton is not the right choice for president.
“I think that one of our goals should be that every American own their own home, but I’m not going to mandate that every American own their own home. I think that every American should have…an affordable college education. But I’m not going to mandate that every American go to college. I feel the same way about health care.”
— Senator John McCain