Raising Taxes on The Rich in Income for Healthcare
This short piece suggests how healthcare could be paid for in the US.
A necessary first step to restore faith in American democracy and the public sector. or how to close the nation’s current fiscal gap. Right now the current Republican Administration led by President Tru_p solution is to cut healthcare via Medcaid to much (~20 million) of the population. Another part is to end subsidies for ACA healthcare to which millions will not be able to afford ACA healthcare insurance policies.
But what if policy changed to tax the higher income brackets. Could this resolve the issues with providing healthcare? Mostly yes. There still is the rising cost of healthcare to contend with which is less problematic in Europe or other places. I do not have a solution for such yet.
There is some detail in this abbreviated piece from the EPI. It more or less spreads the idea of what could be done if our leadership considered the needs of millions of the US population.
“Raising taxes on the Ultrarich,”
Measures to enact a series of tax reforms laser-targeted at only the rich could raise significant revenue. One obvious benchmark suggests itself: close the current fiscal gap. The fiscal gap is how much (as a share of GDP) taxes would need to be raised or spending would need to be cut to stabilize the ratio of public debt to GDP. Today this gap stands at roughly 2.2%.
Table 1
Table 1 gives a rough score for each of the provisions mentioned above in an early part of this discussion. It then conservatively estimates the combined revenue-raising potential of this package. The plan assumes the whole policy package is equal to 70% of the sum of its parts. This would help account for some fiscal “externalities” (i.e., taxing wealth means wealth grows more slowly over time and, hence, reduces tax collections on income earned from wealth going forward).
It also would help account for some potentially duplicative effects that could reduce some revenue collected by the combination of these reforms. For example, if the step-up in basis were eliminated, the incentive for rich households to finance consumption with loans would be reduced, so the revenue generated by treating the pledging of collateral as a realizable event would likely be reduced.
This combination of confidence-building measures to tax the rich would unambiguously be able to close the nation’s current fiscal gap. The sum of the parts of this agenda would raise roughly 4% of GDP over the long run. That is doable even if the sharp 30% discount on the sum of these parts was applied. It would still be just under 3% of GDP. Telling the American public that this package of tax increases on the ultrarich had put the nation on a fully sustainable long-run trajectory. Such being done would still leave enough money to fund something as large as universal pre-K for 3- and 4-year-olds or a radical increase in more generous coverage in the nation’s unemployment insurance system. Such measures could be seismic for changing the tax debate in the United States.
There are those who advocate for even larger expansions of the U.S. system of income support, social insurance, and public investment. The future political debate over how to finance them would be on much more favorable ground with the public’s support. The conditions of the debate would change if the public could shake the (too often true) impression that the U.S. government is failing to ask (or command) the ultrarich and corporations to do their part to contribute to the nation’s fiscal needs.
Conclusion
Obviously, this program of laser-targeting tax increases on the ultrarich is not the policy of the current Trump administration or the Republican majority in Congress. They have already spent the first half of 2025 forcing through a monster of a reconciliation bill, which extended the expiring provisions of the TCJA. These are provisions providing disproportionate benefits to the very rich.
As it stands, the reconciliation bill represents a shocking upward redistribution of income from the poor to the rich by:
- paying for trillions of dollars in tax cuts that primarily benefit the wealthy, and
- stripping health care and food assistance from millions of Americans.
As damaging as extending these expiring provisions will be to tax fairness and economic outcomes, they might be even more damaging to the public’s confidence. Such being . . . a tax policy could ever be reoriented to ensure that the ultrarich and corporations pay their fair share.
What Would a Debate Bring to the Table?
Instead, the debate over the expiring provisions will draw attention to two facts.
- First, the large majority of U.S. households will see a tax cut (relative to current law), but these cuts will be much larger for the rich. For example, the bottom 60% of households will see a tax cut of just over $1 per day, while the top 1% will see a cut of $165 per day, and the top 0.1% will see a whopping $860 per day.
- Second, these regressive tax cuts are bundled with spending cuts that will sharply reduce incomes for the people in the bottom half of the income distribution, leaving them net losers overall.
This combination of facts will continue to feed perceptions that the only way typical households can get something out of tax policy debates is if they settle for crumbs falling from the feast enjoyed by the richest. And even these crumbs will be taken back in the form of cuts elsewhere.
It’s time to reverse these perceptions.
It will only come if policymakers engage in a confidence-building set of measures to raise significant revenue only from the ultrarich. It is then the public’s stance toward tax policy can be changed from being anti-tax to being willing to have debates about the pros and cons of public sector expansions. The population then they will be content in the knowledge the rich will neither escape their obligations nor be able to claim the lion’s share of benefits yet again.