Wednesday, August 01, 2007

Ghouliani Healthcare

Shark-fu (aka Angry Black Bitch in a great post today) turned her focus on to Rudy Guiliani's health care scare (proposal) against "socialized medicine":
Mayor Giuliani has called universal healthcare “Socialist” and those who propose universal healthcare for all Americans “Socialists”.
First of all, Americans are not all a part of a family unit. Some of us are single. Too many of us are uninsured. How the fuck does that tax deduction help us?

Oh, wait!

He has no details for this magnificent defense against socialized medicine!

Of course!

Let me guess…a bitch should trust you on this, right?

Lawd, have mercy.

The average American family is drowning in debt. Wages have not increased but costs have. If you give the average American family a $15,000 tax deduction they’ll probably need that cash for pesky shit like food and credit card payments.
This inspired me to dig up a few statistics for how this might help the average American family in actual dollars. I posted the following as a comment:
We know there are just so many things wrong with Ghouliani's "healthcare" plan it's hard to pick where to start addressing how bad it is. So, allow me to hit on the following aspect.

The $15K tax deduction presumably is only applicable if applied toward the purchase of health insurance, although there may be some fall over for deducting medical expenditures up to a $15K total (without details who can possibly decipher the "money left over from one year could be used the following year to cover health care costs" statement).

The $15K deduction is for a family, is that independent of family size? What is the deduction for an individual? What is the deduction for a married couple without children or other dependents? What about families in a civil union or gay marriage in states that allow them, but is not recognized by the federal government?

Also, realize that a $15K deduction does not equate to $15K cash back or reduction in taxes owed. A tax deduction lowers the amount of your taxable income -- the point being that even if you received a $15K tax deduction for spending $15K on insurance/healthcare the actual reduction (or refund) in your tax statement would vary according to rates on your taxable income, which was the following for 2005:
  • 10% up to $7,300
  • 15% up to $29,700
  • 25% up to $71,850
  • 28% up to $150,150
  • 33% up to $326,450
  • 35% over $326,450
The median family income for 2005 was $55,832. So, for the average family their taxable income after a standard deduction of $10,300 if married filing a joint tax return (or $7,550 as head of household) plus Ghouliani's $15K deduction would place them in the 25% bracket. What does this mean in real $$$ to the average family? Rough (really rough) calculations would take the median family from an approximate $11,383 tax bill (25% of $55,832 - $10,300) to a tax bill of $7633 (25% of $55,832 - $25,300). That's a savings of $3750 on their taxes assuming they spend $15K on health insurance -- 27% of their total income if they could afford it and get coverage. For comparison purposes, a family earning $200K could spend 7.5% of their total income and would see their taxes lowered by about $4,950.

Ghouliani displaying his GOP credentials by proposing those that are most in need and can least afford something should pay more for it.

None of this addresses the issue that most if not all of this money will not be going to actual healthcare (treatment), but to insurance companies who can continue to happily take in money, now supported by tax dollars, while doing their utmost to deny payments for actual treatment.

For some additional analysis, a family earning $45K would drop down from the 25% to 15% tax bracket if they could afford to shell out $15K (33% of their total income) for heath coverage and would receive a reduction (using the same calculation from above) of about $5720 in their tax bill. It is doubtful that there would be any benefit for families earning less than $45K because even with a tax deduction the cost of coverage would remain unaffordable. For the ridiculous at infinitum factor, a family earning $25,300 (or less) a year that managed to pay for $15K of coverage (59% or more of their income) would see their tax bill drop to zero from $2250 (or less), thus paying (at least) $2700 more for the same coverage as a wealthy family earning $200,000, while families with taxable incomes in the top bracket (35%) would save an additional $300.


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