Economist Alan Viard talks about the high-income surtax in the House health care bill. I completely agree with his analysis. Any tax takes a toll on savings and therefore investment, and since the wealthy do by far the majority of the saving this type of tax is extremely distorting on investment and thus GDP growth. One particular excerpt I especially like:
Third, the proposed surtax reflects an unsustainable approach to tax and fiscal policy. As commentators across the political spectrum have recognized, the existing fiscal imbalance cannot be addressed without imposing sacrifices on a broad segment of the population. Any new spending programs, such as those in H.R. 3962, will impose additional burdens. By linking these programs to a tax imposed on only 0.3 percent of the population, the bill obscures that fiscal reality. If the programs in H.R. 3962 are worthwhile, they are worth paying for in an open and broad-based manner.
This is what I have been saying for some time. If giving so many more Americans health insurance is a worthy goal, there will have to be sacrifices in the form of higher costs or lower quality care. I think either of those things are too harmful to justify this, since we are only talking about giving people insurance, not care, not to mention all of the perverse incentives.
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