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Health Care, Taxes, & the Social Contract November 3, 2008

Posted by Kate Ryan in Health Care, National Politics, Presidential Politics.
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I haven’t posted for a while because I was away on business all last week attending our yearly conference in Jacksonville, Florida (Go Gators!).   Of course, politics became the dinner-table talk several times last week, and I was just flummoxed by some of the stuff I heard.

Now, my business is the national defense; I am a civilian employee of the DoD.  Most of us at the conference, even the senior executives, make solidly middle-class salaries.  For all of us, Defense is our bread and butter, so I did not expect a groundswell of support for Barack Obama in this crowd.  But the depth and breadth of distaste for Obama and level of support for John McCain surprised me.  (One note, while I was spouting my “extreme liberal” views, the African-Americans and military people kept quiet.  As one of my friends said – “I don’t want my vote for Obama written off just because I’m black.”  I wonder if the military did not feel comfortable openly supporting Obama as well….) 

One night, our conversation turned to health care.  One man told a story that I felt I really needed to share.  This man retired from the military about 10 years ago.  While he was in the service, his and his family’s health care was totally taken care of – they paid nothing.  He said that he was lucky that he found a job with the federal government when he retired, because he had a mild heart problem.  Since the federal government will not allow insurers to exclude for pre-existing conditions, he was able to obtain health insurance.  Of course, he had to now pay a portion of the cost, so he chose a high-deductible major medical plan that required a 20% co-pay for hospitalization because it was the lowest-cost plan to him and his family.  Then, his wife was diagnosed with Stage III breast cancer.

His wife underwent a double mastectomy, radiation, and chemotherapy.  She had to have an additional surgery due to complications arising from her first surgery.  When all was said and done, her hospital bills came to $780,000.  He and his wife – who HAVE insurance – are now saddled with a $156,000 debt that they are paying through monthly payments at 6% interest.  This gentleman, who is now in his late 50’s, is facing the next 15 years of debt payments because his wife required medical treatment.  Though he has a good, secure job, this will undoubtedly alter his plans for his future.  But at least he has the good job.  Imagine if he were a construction worker making – seasonally – $15.00 an hour (that’s about $30,000 a year). 

Upon hearing this, I, of course, said that that’s a perfect illustration of why we need socialized medicine – and that I was a big fan of European Social Democracy.  You would have thought I said that I wanted us all to start eating kittens!  Everyone at dinner started howling.  And what was the main howling point?  Taxes.  Everyone said that they did not want to pay the taxes that universal health care would cost.  Even the gentleman paying off the $156K hospital debt said absolutely no – he did not want his taxes to go up.  I was stunned.  I pointed out to him that even if his taxes went up $5,000 a year, it would still cost him less than what he was paying in payments, premiums on his insurance, and drug costs.  “No, no, no!”, he insisted.  “They pay 70% taxes!”  Then, the table degenerated into horror-struck exclamations over such high taxes and my protest that I don’t think they pay that much in Canada and Europe were totally ignored.   So, I decided to get the facts.

France, Great Britain, and Canada all have progressive taxation, just like the United States.  The more you earn, the more you pay.  Their tax systems are simpler, as there are few deductions (one big U.S. income deduction – for mortgage interest – is non-existent in these countries, but their rates of home ownership are only slightly less than the U.S.).  As far as I can tell, they also make no distinctions between single and married filers. 

In Great Britain, you will pay 10% on incomes up to £2,150 ($3,500), 22% between £2,150 and £33,300 and 40% on income over £33,300 ($57,500). 

In France, the rates are a bit more progressive with more brackets; up to €5,687 ($7,260) carries no tax, 5.5% over €5,687 up to €11,344 ($14,500), 14% over €11,344 up to €25,195 ($32,200), 30% over €25,195 up to €67,546 ($86,500) and 40% over €67,546. 

In Canada,  citizens pay 15% on the first $CDN 37,885 of taxable income ($31,700), 22% on the next $CDN 37,884 of taxable income (on the portion of taxable income between $CDN 37,885 and $CDN 75,769 ($63,300)), 26% on the next $CDN 47,415 of taxable income (on the portion of taxable income between $CDN 75,769 and $CDN 123,184 ($103,000)), and 29% on taxable income over $CDN 123,184.  In Canada, there are additional Provincial taxes – like our State taxes.

If my husband and I were living in England, our taxes would be about $30,000 on an annual (combined) income of $102,000 – about 30% overall.  We currently pay, with all of our deductions and everything, about $12,000.  It seems as though we would be absolutely murdered in the British tax model.  However, we would no longer pay social security taxes of about $8,000 per year.  We would no longer pay medicare taxes at $2,000 per year.  We would no longer pay state and local income taxes at $5,000 per year.  Finally, we would avoid paying health insurance premiums at $2,600 per year.  When you add up everything we currently pay, $29,600 per year, we would only be paying $400 a year more to ensure our old-age pension (social security) and health care for us and everyone else.  In France, we would pay only $25,366 in taxes – a savings of over $4,000 per year – and our daughter would get free college plus we’d have six weeks vacation every year!  Where do I sign up?

Someone once said, “Everyone wants to get to heaven, but nobody wants to die.”  Same with taxes – everybody wants services, but nobody wants to pay for them.  I would much rather pay what they do in France and England and maintain the social contract with the people than buy another useless weapons system that will be obsolete before it is finished.  It’s time that all Americans take a good hard look at exactly what we want to be about in this country.  It’s time we put our citizens’ life – and quality of life – at the top of the list.

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Comments»

1. grannykatz - November 3, 2008

Let me know when you’re leaving for France and I’ll go with you. I live on a fixed retirement income. My health insurance premiums will go from $222.00 per month to $444.00 per month starting in 2009. I certainly can’t afford that so I will either have to join the uninsured or pay $250.00 per month for a plan with a $5000.00 deductible and no benefits.

2. sfokc6125 - November 3, 2008

Homeland Security is hoping for McCain to win. I have proof of that .
If you are in the coal mining bizz then vote McCain because Obama has you in his sights to shut you down. PA needs to remember what happened when the steel plant shut down. How many ghost town will Obamas make. If it wasnt for company’s like Phoenix Glass that part of PA would have gone out . You dont kill jobs ,You dont raise taxes and spend more on a weak dollar. YOU CUT TAXES YOU SPEND LESS AND YOU KEEP AMERICANS WORKING.


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