The welfare state and your life savings are two cars heading down a one-lane road in opposite directions. One must yield, or there will be a crash.
For Americans who believe in the old-fashioned virtues of hard work, self reliance and respect for private property, the solution is obvious. The welfare state must yield.
For politicians who believe in the welfare state and redistributing wealth, the solution is equally obvious. Your savings must yield.
Barack Obama is of the latter group. In the new health care proposal he outlined this week, he suggested a series of unprecedented tax increases that would extend the greedy hands of government into the life savings of hard-working Americans.
These new taxes would essentially construct a new fiscal pipeline capable of carrying money out of the savings of private citizens and dumping it into government coffers specifically for subsidizing Medicare under the new health care system Obama envisions. The White House summary of Obama's proposal presents this would-be pipeline as a facilitator of economic justice.
"Under current law, workers who earn a salary pay a flat tax of 1.45 percent of their wages to support the Medicare Hospital Insurance (HI) trust fund, but those who have substantial unearned income do not, raising issues of fairness," says the summary. "The Act will include an additional 0.9 percentage point Hospital Insurance tax for households with incomes exceeding $200,000 for singles and $250,000 for married couples filing jointly. In addition, it would add a 2.9 percent tax for such high-income households to unearned income including interest, dividends, annuities, royalties and rents (excluding income from active participation in S corporations)."
There are, of course, multiple unanswered questions here. For starters, wouldn't increasing the Medicare payroll tax on "households with incomes exceeding $200,000 for singles and $250,000 for married couples filing jointly" violate Obama's pledge that, as his campaign literature put it, he would "not raise any tax rate on families making less than $250,000 per year, period." Plenty of single Americans, who are raising children or taking care of other dependents, file their taxes claiming "head of household" status. Aren't they "families" covered by Obama's tax pledge?
Secondly, wouldn't slapping these households with a new 2.9 percent tax on interest, dividends, annuities, royalties and rents also violate Obama's tax pledge?