When you ask the American public about taxing Employer Sponsored Insurance (ESI) everyone flips out into a negative. Everyone instead wants the rich to pay more (a problem that I pointed out in a previous post on this blog). Never mind the fact that the ESI exemption from income is a) inefficient (it is a subsidy and thus it is a government health care system) and b) inequitable because it is regressive (vertical equity) and puts similarly situated taxpayers income-wise in very different situations (horizontal equity). All it has going for it is its administrability.
Well, what about broad based taxes? Gleckman points to the fact that the numbers plummet there. It focuses all about taxing the rich. However, we are already raising the top marginal rates (or proposing to raise them) to 39.5% (or something near 40% without going over it). We want to phase out certain itemized deductions for higher earners. We want to create strange inabilities for our corporations to write off their own taxes that they earn overseas and pay other countries because they are taxed on worldwide income, but other countries have a territorial system so they only pay taxes to the country that where they do business. And a VAT on top of an income tax would likely freak out more people.
Sadly, I think this represents a sense of free lunch. For so long the U.S. borrowed its way to fund huge spending priorities from the fancy weapons systems, to student loans, to health care, while all the while trying to slash taxes. Now we are facing an important move that I would say works out on both a) equity and b) efficiency to start covering everyone. It is going to cost money. It is expensive. So we need everyone to chip in. Unfortunately, taxes, instead of seen as something mildly annoying but filled with a sense of virtue, have grown evil. I think we are just too wrapped up in ourselves (I include myself in this "me" culture).
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