"The Get America Working! approach would work, in effect, by correcting a major price distortion. The current U.S. Internal Revenue Code taxes employment far more heavily than it does the use of natural resources. This distortion has grown progressively worse as payroll taxes have grown. Revising this distortion would increase employment, equity and overall economic vigor importantly. And it would do so by responding to market price signals, not through clumsy and expensive government interventions."
"The Achilles' Heel of Health Care Reform"
Date:
Wed, 06/17/2009
Source:
Politico
In this blog former deputy assistant secretary of the Treasury for economic policy during George H.W. Bush’s administration, Bruce Bartlett, addresses the problem of funding expanded health care coverage without raising payroll taxes. He suggests a value added tax (VAT), widely used in Europe, is the right approach. Get America Working! has put forth a non-labor value added tax as an option for replacing burdensome payroll taxes. Bartlett offers his fellow Republicans a "sweetener" -- abolishing the portion of payroll taxes that pay for Medicare and using a VAT instead.
Economist Len Burman of the Urban Institute believes that a value-added tax would be a better way of paying for health reform. It has large revenue-raising potential even at low rates and imposes less of an economic burden per dollar raised than any other tax that economists know of. [More...]
