Monday, March 26, 2007

Spin Nation

There are no spending programs. Now there are only fully refundable transferable tax credits.

From Senator Coburn's Medi-Choice Proposal.

Under the Act, Americans would be eligible for a tax rebate to purchase health insurance. The “Medi-Choice” rebate would be made directly to a patient’s health insurer and would be worth $2,000. Families would receive a $5,000 tax rebate.


This my look like a "check" and may be payable to someone who is performing a government service, but in reality it is a tax cut. Trust Us.

By the way Senator Coburn's idea does look like a good spending proposal. But it does in fact increase spending.

13 comments:

Nicolas Tremblay said...

That tax cut have a double effect and it's better than just cutting the tax alone!! It's an inscensive to comsume more health good which by the way will improve american life quality. Also it's not a increase of spending but a cut of revenu :it's a tax rebate and you can't spend money you don't collect. So I think it's preferable to say :
"By the way Senator Coburn's idea does look like a good tax cut proposal. But it does in fact increase the federal deficit. Are we willing to cut the spending elsewhere to implement that tax cut."

Karl Smith said...

So could I replace Social Security with an over 65 tax credit. The credit would be pre-payable and fully refundable.

This way I can slash taxes and spending at the same time!

With enough tax cuts like that we could get negative taxes. Imagine the supply side effects.


More seriously, however, credits do nothing to lower marginal tax rates. The tax payer is still in the same bracket, he or she simply gets more money back, so much in some cases that the indivdual pays negative taxes.

When the government is giving you money thats a transfer payment which should be considered spending not tax cutting.

Nicolas Tremblay said...

In fact, a tax rebate is a refund of the sum the bigger of either 2 amount; the total of refundable tax credits or the amount of withholding their employer have collected. So the maximum economic cost for the government for a single citizen is the amount they were collected without that rebate. What's left is kept for future expenses in health services. I certainly don't saw anything about negative tax. That could only happen if the policy was a lump sum.

In fact, that tax rebate is aim to people owning or working in small compagny (because corporation tend to offer more often that kind of coverage) Anyone paying $2,000 in taxes will be eligible : it's relatively fair in my point of view.

Don't you think that it's more preferable instead of collecting tax revenu, to leave that sum for health expenses? Unhealthy population is costly for a state...

Karl Smith said...

In fact, a tax rebate is a refund of the sum the bigger of either 2 amount; the total of refundable tax credits or the amount of withholding their employer have collected.

This is not always the case. I was under the impression that coburns rebate was fully refundable, meaing that you can get back more than you pay.

The EITC for example is fully refundable and I think the child credit is under the 2003 act but don't quote me on that.

Nicolas Tremblay said...

But how can we make sure that the money is acctually spend in health care services if we just give a lump sum? I agree with you that it's a horrible spending plan the way you've understand the bill!

Karl Smith said...

Man you are quick

You apply it directly to the insurer or health provider. In a different context we would call this a voucher.

I use the term fully refundable transferable tax credit. You give your credit to the insurance agency and in return they give you health care.

Whats left over you can use for discretionary health care.

Nicolas Tremblay said...

It's seem to me that this bill is all about public funding of health care service... As a canadian I can hardly oppose but the congress should be carefull with that kind of plan since poeple can consume an huge amount of health goods if they don't have to pay for it. Here we have a huge problem with queue in emergency since a lot of elder goes there for a flu!

I think that your federal is quite irresponsible in regards to access to health services for poor... At least that bill try to address that...

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