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Brugger: A need for tax reform

There are two political phrases I am sick to death of hearing: “Tax the Rich” and “Tax Cuts.” The reason I cringe at them is that they are hurled as answers to the very real problems of income stagnation and regression as well as slow economic growth. They are simple phrases which talk about easy answers to the last century’s economy. They call up visions of communism and trickle-down economics. Both failures.

As I said last week, our capitalist economy has been overwhelmingly efficient in producing wealth, but it has been slow to generate satisfactory economic conditions for most Americans. Tax policy has consciously been used to shape the economy since Roosevelt used government spending to lift us out of the Great Depression (and WWII continued it). It is time to think of creating new uses for capital that will indeed produce economic growth.

One of the first things I think of is to stop thinking of the short term. We can dream of making money overnight, but rewarding that behavior has had disastrous effects on the economy. It has encouraged wagering with money rather than investing it. By considering these wagers as short-term gains rather than income, they have been taxed at a lower rate. Among other things, it has produced a game called “Raise the Stock Price.” This has led to companies thinking of ways to make people want to buy more of their stock. Unfortunately, this often involves reducing labor and spending profit in ways that glamorize the stock in the marketplace. By taxing short-term profits as income since the money earned is put to use again as quickly as most paychecks, fewer people will want to invest in that way.

Another way to use capital is to invest in long-term enterprises. This ties up capital so that investors wanting liquidity invest in the more traditional banks and insurance companies that in turn invest more in local businesses, home and personal loans. This also can produce slower growth in stock prices, which could potentially allow companies to focus on profit and long term sustainability. By having lower taxes for these investments, they would be more attractive.

Another way we can use capital is with not-for-profit or low-profit investing. Low profits would be, essentially, research industries. They would finance basic and engineering research or small-scale demonstrations and then sell the technology to larger enterprises to develop. Venture capital is not new, but this type of investment could be expanded with legal and accounting measures to result in even more robust innovation. Again, lower, if any, tax liability and risk of zero returns.

There is no doubt, however that we are not funding government adequately. Because of this, at a national level, we have engaged in deficit spending. Local and state governments have either reduced spending or taken on debt they can’t repay. Our infrastructure and schools need more money and so do other government programs that are being starved (some by a desire to kill them). Our higher tax brackets have been higher in the past and the economy has still been robust.

There were originally two reasons for the impetus to cut taxes. One was to create capital for investment, not a bad thing. The other was that our graduated tax brackets were too close together. I’d get a raise and most of it seemed to be lost in higher tax withholding. The incentive to work was decreased. Not a good thing. Tax brackets have been adjusted, but lower upper-bracket taxes have resulted in too much capital chasing too few safe investments. The differences in wealth between the upper and lower earners has depressed the pursuit of happiness we founded our country on.

There is indeed a need to levy higher taxes on the wealthy, and they know it. In fact, it wouldn’t bother many of them at all because if they are all taxed, they don’t lose their place in the Fortune 500! There is a certain fairness to it also. Many of the very wealthy are corporate bureaucrats rather than entrepreneurs. I don’t mind more wealth going to the innovators, but I am not sympathetic to those who use favorable accounting practices, excellent social skills and gamesmanship to prosper inordinately.

I do have a bone to throw at wealthy tax payers. A sort of “choose your project” tax plan. I heard it alluded to by President Trump once. If your town, state, region needs public infrastructure, pay for it! You get to make sure the money is well spent, you get bragging rights, and you get tax considerations. This, of course is in addition to philanthropy already available.

Our tax policy needs an overhaul. It must be a multi-year approach with some overriding questions. Will this increase employment? Will this increase discretionary income so that more people have a greater range of choices for their lives? Will this fund government satisfactorily? Just fiddling with tax rates won’t do the job.

Other View: Trump can still undermine the Affordable Care Act

The following editorial appears on Bloomberg View:

In his very first executive order, directing federal agencies to “waive, defer, grant exemptions from, or delay” various parts of the Affordable Care Act, President Donald Trump stated his intention to repeal the law. Two months later, with that effort in shambles, the order has become the administration’s entire game plan on health care.

That’s not only inadequate, but reckless. With no Republican replacement for the ACA on the horizon, every step taken to weaken the individual insurance market and Medicaid risks destabilizing a health-care system in need of reinforcement.

The Health and Human Services Department wasted no time following Trump’s order. In January, it withdrew $5 million in advertising to remind people that the deadline for purchasing 2017 health-insurance plans on the individual market was at hand. If the department is as reluctant to publicize the sign-up period next fall, the number of insured Americans stands to fall.

The IRS, for its part, responded to the executive order by abandoning its plan to reject tax returns from filers who failed to indicate whether they had health insurance, as required by the law’s individual mandate. This, too, discourages people from buying insurance, especially healthy people who are needed to balance the risk pools and keep premiums reasonable.

The Justice Department could be next to cause trouble, by ending the government’s defense against a congressional lawsuit that aims to stop some $7 billion in federal “cost-sharing” payments to insurers, payments that enable them to reduce customers’ out-of-pocket costs. Withdrawing this support would discourage insurers from continuing to participate in the individual market.

And of course there is more mischief Health and Human Services can make. Secretary Tom Price has indicated he’s willing to let states impose a job requirement on Medicaid recipients — an idea that, if it could be enforced, would cause many people to lose or fail to qualify for insurance. Price could also narrow the so-called essential health benefits that the ACA requires policies to provide, including coverage for birth control and mental health care. And he could greatly expand exemptions to the individual mandate.

To be sure, this executive power has legal limits. The ACA was passed, as the Supreme Court has noted, “to improve health insurance markets, not to destroy them.” And the president is sworn to faithfully execute the law.

Fortunately, the existing system is not on the verge of collapse. Indeed, it stands to become more stable as the mix of participating insurance companies shifts. But there are still too many people without insurance, and in many states too few affordable choices. The president’s responsibility is to strengthen the system — not push it toward failure, or sit back and wait for it to “ explode” in the hope that voters will blame someone else.

There are signs Trump may be interested in working with Democrats on the problem. If true, that would be a welcome change in approach. Lasting improvements to the U.S. health-insurance system will depend on both parties offering their most constructive ideas.

Letter: Does your insurance cover medical emergencies?

As Congress debates repeal and replacement of health care reform, there are provisions in the Affordable Care Act that are essential to millions of emergency patients and must be protected. More than 9 in 10 registered voters in a recent poll said that health insurance companies should include coverage for emergency medical care.

When asked if someone visited an emergency department because they believed they were having a heart attack, but were later diagnosed with a panic attack, more than 8 in 10 (83 percent) said that health insurance plans should cover the visit. The principle of covering medical care based on symptoms that most people would consider potentially life-threatening, rather than the final diagnosis, is called the “prudent layperson" standard. This was codified into federal law, including the Affordable Care Act, following years of denials of coverage for emergency care by health insurance companies.

Patients can’t choose where and when they will need emergency care and shouldn’t be punished for having emergencies. We urge all of our patients to investigate what their health insurance policy covers and make sure that policymakers and insurance companies provide fair and reasonable coverage for emergency care.

Dr. Heather Hammerstedt

President, Idaho chapter of the American College of Emergency Physicians