I got to thinking about Senator Elizabeth Warren’s plan for Medicare4All. She says it will cost $52 trillion over the first ten years. Of course, it’s a government program so we can guarantee it will cost more than that, but we’ll use her figures for now.
To start with, there are about 330 million people in the US. So $52 trillion in ten years would work out to spending about $16,000 per year per person for healthcare. And that, in turn, means we would be spending:
Over. $60,000. Per. Year. For. A. Family. Of. Four.
YIKES! This is supposed to be the brilliant solution to the US spending too much money on healthcare? Fix it all by spending sixty kilobucks per year on each family of four? Regardless of who gets taxed to pay for it, that’s ludicrously expensive healthcare.
How expensive is it? Well, her plan is claimed to put us in line with the Europeans … except for one little detail. She plans to spend far, far more per capita than any European country on healthcare. Luxembourg and Switzerland spend the most of all the European countries, about $26,000 per year for healthcare for a family of four. Senator Warren is proposing spending almost two and a half times that amount.
So that’s the first huge problem with her proposal—it costs almost two and a half times as much as the most costly health systems in Europe.
So I’d throw her proposal in the trash can simply for being obscenely overpriced. But there’s another glaring issue, which is just who she expects to pay for her whizbang plan. She says her wealth tax on billionaires will do the trick. So I thought I’d look at just how much money her so-called “Ultra-Millionaire’s Tax” would actually raise.
Conveniently, she’s put a calculator up on the web so all the billionaires can calculate what tax they would have to pay. An analysis of the calculated results reveals that her mystery tax requiring a special calculator is actually a bog-standard six percent tax on the value of the billionaires’ holdings. It’s not a progressive tax. It’s essentially a straight six percent of their wealth per year regardless of their holdings.
And for the final step, we note that the total wealth of all of the two thousand plus billionaires in the US is $2.9 trillion dollars … and six percent of that net wealth is a tax of 0.17 trillion dollars per year.
Now, recall from above that the Senator’s program will cost us $5.2 trillion dollars per year.
So her “Ultra-Millionaires Tax” will raise … wait for it … a mere 3.3% of the money required each year to fund her fantasy of Medicare4All. That’s enough to pay for her plan for the first 12 days of each year. And after that twelve days, she’ll need more $.
Heck, even if we took every single dollar from every single US billionaire, if we stripped them of everything that they own and sold it for taxes, all of their $2.9 trillion net worth together would only pay for less than eight months of one single year’s cost of Healthcare4All.
Which brings us to the underlying problem. Total income for all Americans is on the order of $17.6 trillion dollars per year. Senator Warren is proposing that we spend a third of our total income on healthcare … and that’s in addition to the Federal, State, and local taxes we’re already paying.
Send the Government over half of our income as taxes?? Madness.
And as a final comparison, we can compare her ten trillion in new healthcare taxes to those Federal taxes we’re already paying. Last year the US Government took in about $3.6 trillion in taxes. Senator Warren proposes that we jack our tax burden about twofold, to $8.8 trillion per year.
And that would mean that as a country we’d be paying half of our total income in taxes.
Now, there’s a question that Senator Warren has refused to answer from the beginning of her campaign—will her plan require increasing taxes on the middle class? She’s dodged, she’s tapdanced around it, but she’s never answered that simple question.
Well, guess what? If taking every dime from every billionaire in the US would only keep her plan alive for eight months, then yes, folks, you can be absolutely sure middle-class taxes would have to go up.
She proposes to raise our overall tax rate to half of our total income, more than two times larger than the rate today.
Gotta say … the fact that neither she nor her advisors have actually run the numbers on this plan is extremely worrisome. And it gets worse. In California, we have State income, sales, property, and gasoline taxes which add up to about eight percent of total income.
So if we’re to be paying half of our total income in Federal Tax, plus paying another 8% in various State taxes, we’ll be left with less than half of what we’ve earned … and Senator Warren talks offhandedly about that as if it were a good thing and no big deal.
Best to all on a half-moon night,
PS—Senator Warren claims that a 6% wealth tax is too small for wealthy people to worry about. In the comments to her online calculator, she describes her 6% tax as “This amount, which you likely won’t even feel …”
But in only 11 years, a 6% annual tax would cut the value of someone’s holdings in half. Half! It appears Senator Warren and her staff have never heard of the Rule of 70. Like I said … extremely worrisome.
PPS—The Rule of 70 is an old businessman’s trick. It states that if you have an investment making compound interest at some annual rate “X”, the number of years until it doubles in value is seventy divided by X. So if the interest rate is seven percent, it will double in ten years.
And of course, the same thing works in reverse. If you are reducing something by 6% per year through taxation, the number of years to get down to half the original value is seventy divided by 6, or about 11 years.