and the
Citizens Economic Research Foundation

Barbara's Column
July #2

Taxes one thing, health insurance another
by Barbara Anderson

The Salem News
Thursday, July 12 2007

The Legislature's Revenue Committee held a hearing this week on a bill to roll back the income tax rate. This bill falls into the category of "Never, ever give up."

The "temporary" Dukakis income tax increase is 18 years old this summer. It was only 11 when the voters, tired of waiting for the income tax rate to be returned to its traditional 5 percent, phased it down themselves on the 2000 ballot. Two years later, the Legislature froze the rate at 5.3 percent - "temporarily."

Last fall, Deval Patrick, when asked about the "temporary tax" and the "will of the voters," said that he thought voters would prefer a property tax cut instead of an income tax cut and pledged to deliver one.

He's been governor for half a year: The income tax rate is still 5.3 percent. Has the property tax been cut when I wasn't looking? Let's see: My January and May quarterly payments were each $740.98. My August bill is for $803.16. Looks like an increase to me!

Some of it is the annual increase allowed by Proposition 2. Some of it is for overrides that the majority of Marblehead voters decided I should pay "my share" of, for things that they want. Nowhere on the bill is there a "reduction due to Gov. Patrick's property tax cut."

He's still running around the state, trying to raise the local meals tax though, insisting the money will be used for "property tax relief." No, governor: Fool me once, shame on you. Fool me twice, shame on me. Not that I was fooled, but a lot of people were.

Actually, voters are generally so foolish here when choosing elected officials that politicians could just as well tell the truth: "Yes, we promised that the income tax hike would be temporary. We lied in order to get it passed. Yes, you told us to roll it back to 5 percent: We didn't. We told you we'll cut your property tax instead: We won't. So what are you going to do about it, pal?"

The new state budget does increase spending by more than a billion dollars, or 4.2 percent. It increases local aid that does not have to be used for property tax relief but can be used to further increase local "fixed costs" with pay and benefit levels for city and town employees. There is an attempt to address public employee health insurance and pension costs, but much more has to be done, because the present benefit levels are not sustainable.

Many local taxpayers are refusing to pass Proposition 2 overrides, possibly noting that if they aren't getting the promised property tax cut, they at least aren't going to make things worse for themselves on that front. Meanwhile, water and sewer rates for Massachusetts Water Resources Authority customers are expected to increase again.

Responsible citizens' health insurance costs are increasing again, too, but this year there's a new twist: People who don't have insurance are now expected to pay their share of the overall burden. Some of them are just waking up to this fact and protesting the "new tax." I don't see how being required to take some responsibility for one's own health care is a tax.

I understand the argument that young healthy people are forced to pay a premium even if they don't use the health care system and are therefore subsidizing someone else's care. This is what insurance in general is all about: You pay for home insurance, may never use it; auto insurance, may never have an accident. The latter is mandatory because you need to be covered in case your car injures someone else.

Health insurance is different. Everyone gets health care. Our society has determined (and the federal government has ordered) that no one will ever be turned away. So while you may be willing to take a chance on not having insurance, it's not much of a risk; you'll be taken care of by the insured through their premiums (which must be big enough to cover you if you need care) or by the taxpayers who must subsidize the medical system.

One solution might be to have those adults who choose not to buy health insurance sign a release, telling medical personnel not to treat them. Or, they get treatment but will be required to reimburse society for every cent of it. I say this only to simplify the concept: As I see it, no one is born with the right to be taken care of by everyone else, at no cost to himself, though this was the status quo before the mandatory insurance law. Since none of us wants to see dying bodies lying ignored on the steps of the local emergency ward, the only fair solution is to make everyone take some personal responsibility for their own health care.

Some low-income people will still be completely subsidized. For those who don't qualify for government assistance, it's too bad there's no income tax and/or property tax cut, as promised, that could be used to help pay the newly required or increasing premiums.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and Eagle Tribune, and often in the Newburyport Times, Gloucester Times, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence (RI) Journal and other newspapers.