Giuliani: Reform the Tax Code

Friday, August 03, 2007

His plan is far from perfect, but Rudy Giuliani has further fleshed out his proposal for reforming the way Americans pay for the best medical care in the world. He brings up many issues other candidates have completely ignored, such as the role of our tax code in bringing about the current mess, and sounds almost like a real capitalist at times:

America has the best medical care in the world. People come here from around the world to take advantage of our path-breaking medicine and state-of-the-art treatments.

But the healthcare system is being dragged down by decades of government-imposed mandates, wasteful bureaucracy, and massive distortions in the US tax code that punish self-employed and low-income workers. Since 2000, Americans have seen their health insurance costs nearly double. Frivolous lawsuits have led to defensive medicine and doctors leaving the profession. More than 45 million Americans are without health insurance.

America is best when we solve our problems from our strengths, not our weaknesses. Healthcare reform must be based on increased choice, affordability, portability, and individual empowerment.

We need to begin by bringing fairness to the tax treatment of healthcare. The current tax system penalizes millions -- including the rising ranks of the self-employed and 40 percent of employees at small firms -- who pay for insurance on their own and receive no tax benefit. [bold added]
This proposal sounds somewhat like an acceptable program to transition our medical sector from the current unholy mix of capitalist innovation and fascist controls -- except that in fact it is not.

As I have indicated before, Rudy Giuliani's past record on economic issues is hardly one of principled support for capitalism, and this proposal does not deviate substantially from his established pattern. Although he opposes outright nationalization of our medical sector, he still does not oppose government entanglement there -- the very thing that must eventually be completely eradicated.
Empowering people with real choice will improve markets and lower premiums. Expanded tax-free Health Savings Accounts could be used for insurance premiums, deductibles, and other expenses. With more flexibility and individual control, Health Savings Accounts can become a major source of tax-free savings and security for America's middle class. As savings are created and there are reductions in the cost of health insurance, we will develop a new health insurance credit for low-income individuals and families so they can purchase private insurance tailored to their needs. We want to empower individuals, not the government.[bold added]
So much for "empowering" the individuals whose money will have to pay for this new government handout....

Although the election is still over a year away and it remains remotely possible that another candidate will float a superior proposal, I suspect that this is the best we will see in this election. Should this proposal or a similar one end up being implemented, our medical sector will have once again dodged a bullet.

Nevertheless, those of us who favor capitalism must make it clear that this proposal, as it is, does not represent a true "free-market cure". It would be a remission in the disease that is slowly killing our medical sector at best. If we allow an endorsement of continued government interference like Giuliani's stand unchallenged, knowledge of the true nature of the real free market cure will remain absent from the public debate.

And, when the government controls in this plan inevitably cause problems, it could be "capitalism" that ends up, once again, unjustly taking the blame.

In sum: This proposal offers short-term relief of some of the symptoms -- at the possible expense of a long-term cure.

-- CAV

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