Sen. Elizabeth Warren deservedly drew heat from several rivals over her stubborn refusal to acknowledge that implementing a $32 trillion plan to provide free health insurance to everybody would require increasing middle-class taxes. But since she keeps trying to make the same bad argument, it’s worth reviewing what’s so dishonest about it.
Warren, whenever she’s asked about whether middle-class taxes would go up, argues that costs would only go up for corporations and the wealthy, but “costs would go down for the middle class.”
Essentially, she’s trying to make the case that because middle-class Americans would be getting free healthcare, their costs would go down overall. But Sen. Bernie Sanders, who actually wrote the bill she’s endorsing, makes a similar argument about middle-class Americans being better off on net under his plan (without premiums, deductibles, or co-payments), but he acknowledges that the middle class would still pay more in taxes.
It’s one thing to argue that people are getting a better deal by sending money to the government in exchange for services. It’s another to refuse to acknowledge they are paying taxes. For instance, people may believe that paying property taxes and sending their kids to public school is a good deal on net. But they still think of property taxes as taxes and increases in property taxes as tax increases. They don’t say that they aren’t actually paying taxes, because otherwise they’d have to pay to educate their kids, or that property taxes didn’t go up because the percentage increase in tuition at a local private school was even higher.
Even looking at things on a net tradeoff basis, however, Warren’s numbers don’t add up. An analysis of the 2016 Sanders campaign proposal from the liberal Urban Institute took into account that much of the $32 trillion price tag would result from the federal government absorbing many costs currently being paid by states and the private sector. But the analysis still found that the plan would increase overall health spending in the U.S by $6.6 trillion over a decade.
The largest revenue raiser Warren has proposed during her campaign is a $2.75 trillion wealth tax, or less than half this amount. Put aside the fact that European countries have abandoned wealth taxes because they haven’t worked, and that there is significant reason for skepticism that it will raise as much as promised. Warren has already pledged to use the wealth tax to pay for universal child care, universal pre-K, raising child care worker pay, free college, and canceling student loan debt.
The clearest proof that middle-class taxes will have to go up is that other countries with socialized health insurance systems along the lines of what Warren is advocating have higher middle-class taxes than the U.S., and often national sales taxes, or VAT taxes (which are especially punishing for those with lower incomes who have to spend most of their income).
Warren wants us to envy the social welfare systems of other countries while ignoring their tax systems.
