Category Archives: Politics

SB2 – expanding health coverage for Californians

The California Senate and Assembly have passed SB 2 – the Health Insurance Act of 2003, intended to increase health coverage among Californians. They state that 6,000,000 Californians lack coverage at some point during a year, and 3,600,000 Californians lack coverage for the entire year.

Under this legislation, employers would be required to provide health insurance through a private insurer or by paying a fee for each employee into a State Health Purchasing Fund.

Large employers (200+ employees) would have to comply starting January 1, 2006. Medium employers (20 – 199 employees) would begin January 1, 2007. Medium employers with fewer than 50 employees are eligible for a 20% discount in the form of a tax credit. Small employers would not be affected by the legislation.

Both full-time and part-time (100 hours a month, 3 months of employment) employees would be covered. Employees can be asked to pay for up to 20% of the fee. Employees whose annual income is within 200% of the poverty line can be asked to pay for up to 5% of the fee.

“2160.3. It shall be unlawful for an employer to designate an employee as an independent contractor or temporary employee, reduce an employee’s hours of work, or terminate and rehire an employee if a purpose of which is to avoid the employer’s obligations under this part.”

Thoughts

I think increasing health insurance coverage is a good thing.

Providing health insurance to employees benefits employers in terms of being able to hire the most qualified workers and, if utilizing a good preventative health program, increases productivity.

I do have reservations, though. For small businesses where the level of demand that would merit expansion does not exceed the increased cost of doing business by jumping to that 20-employee level, this will discourage growth. What this means is that there will be one less job and there may be missed opportunities for that small business. A better system might be a graduated system where for employers of 20 to 100 employees could go from paying 20% of the fee to 100% of the fee in 10% per 10 employee increments. We’ll see what happens, since the fee will be based on the number of participants and the administrative costs of the program.

Furthermore, the bill doesn’t do much to rein in the escalating costs of health care, prescription drugs, and worker’s compensation, which is a huge part of the health insurance problem in this country.

Will Governor Davis sign this bill?

Probably. Now that he’s recast himself as a Progressive, he’s been trying to suck up to Californians who have been predominantly progressive for the last fifteen years. (There are two forces that will determine how this personality changes over the next ten years: the growth of the minority majority, and the continuing sprawl of the suburbs.)

I am still of the mind that some form of universal health care is what we need to ease the burdens on business and citizens. Critics bring up the specter of long lines and other problems of “socialist medicine,” but when you are talking about 40 million people nationwide who go without health care, we have a moral imperative to do something about it.

California Tax Reform Association

The California Tax Reform Association deserves a little more investigation. At first I thought it was some kind of Republican double-speak. Then I realized these guys were on the NO side of the issue below…

At first glance, it seems these guys (this guy?) are for closing corporate tax loopholes and revising Prop 13 so that commercial property will be taxed (this is not about your homes, guys–it’s about the Irvine Company and Spieker Properties and the rest of those big landowners).

Sounds good to me.

California Recall Election Voter Guide – Prop. 53

California Recall Election Voter Guide – Prop. 53

I wanted to get a little more information on Prop. 53, and as I suspected, it’s another bite of the General Fund pie.

Spending on infrastructure projects is good.

But here’s the big problem: we the voters have NO CLUE what else we’re spending money on and therefore HAVE NO RIGHT to mess with it.

Here’s an analogy:

Kweisi and Laetitia have three kids, A, B, and Q. For some reason, these parents have given the kids the power to lock-up money for spending.

A decides they ought to spend 10% on video games, growing by 1% every year until it reaches a max of 20% so that the family can keep up with video game culture.

B decides that ice cream is essential to the family’s happiness and mandates that no less than 20% and no more than 25% of the money should go to ice cream and ice cream type products.

Q and A decide that 40% should go to trips to Disneyland and Universal Studios.

And so on, and so forth. These kids have no concept of money or expenses. Meanwhile Kweisi and Lavinia find that they have a smaller and smaller percentage of the budget to pay for rent, food, and clothing.

When you let the voters lock up pieces of the budget like this, it might sound like a good idea at the time, but without looking at the whole budget, you have no idea what you’re locking up. Why was there a budget crisis? Initiative-locked spending coupled with a sagging economy coupled with tax cuts (affecting state revenue) coupled with the energy crisis coupled with soaring medical insurance costs. With over 2/3 of the budget tied up in these initiatives, Sacramento has no wiggle room. There’s a reason why we have representative democracy. Our representatives are supposed to look at the entire budget and determine the right mix of spending. You and I and our mothers do not have that perspective when we are voting.

So vote NO on Prop. 53.

Philosophy

Underlying my belief in a progressive taxation system is the idea that those who make the most money are the ones who have benefited most from the American system. Without an educated labor force, an infrastructure that promotes commerce, a system of institutions that spur growth, and the social stability provided by social programs, the wealthiest Americans would not be where they are today. As such, they have a responsibility to pay a higher percentage into the system than other Americans.

Furthermore, to view taxation only in terms of income and wealth taxes is to oversimplify taxation. Payroll taxes are a flat 7.65% of earnings up to $85,000. These taxes fund Medicare and Social Security, and are funded primarily by the middle and working classes. It’s not fair for a $250,000 a year executive to pay a lower percentage of his earnings than an entry-level associate into Social Security and Medicare. Property taxes and sales taxes are also fixed-rate taxes that tend to take a bigger chunk out of the incomes of middle and working class families. Sure, sales tax is a tax on the consumption of goods, but the wealthy don’t spend as much of their income on goods as do other Americans. Add to this the various fees we pay to various local and state agencies, and you will find that the discrepancy between taxation of the richest Americans and the rest of us is not that great. Finally, the wealthy have many options to protect their wealth from taxation that are simply not available to those with lower incomes.

As for the Libertarian argument against taxation and government, I’d like to see them take over a country and implement their ideas. Let’s see how a purely market-based society runs, where every family has to pay for their own education and roads, where there is no health insurance for the elderly and poor, where people who lose their jobs have nothing to fall back on, where no one protects consumers from corporations that lie, where no one insures bank deposits against the failure of that institution, and destruction of the environment is standard business practice. Libertarians are so simple.

The government is not a burden on the people. The government should be the agent of our society and civilization.

Data

There’s nothing better than data to back up an argument. Unless you’re talking to an imbecile who, when confronted with facts, will deny the veracity of the data and attack the source as a member of a conspiracy of some sort. In those cases, there’s nothing better than a gun to back up an argument.

Back to the point:

The US Census bureau has lots of data, and publishes a lot of reports that talk about who we are as a nation, and more importantly, where we’ve been. For instance, the creatively-titled Money Income in the United States report talks about just that. I’ll wait while you follow that link above and download the PDF.

Ready?

Turn to page 25. Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households: 1967 to 2001.

If you examine the Share of aggregate income columns, you will see that every quintile (20%) of the population has lost some of its share of income except for the highest quintile. In fact, most of this increase in share of income occurs for the highest-earning 5% of Americans. Note that these are households that last year made $150,499 and up (probably after taxes and deductions, but I’m not sure).

If you chart the percentages over time, you notice that the increases in income share for the highest-earning Americans begin around 1982. This is the Reagan tax cut. You will also notice that there is a huge jump from ’92 to ’93. This is the Bush recession. The interesting thing is that both the tax cut and the recession were opportunities for the highest-earners to get a larger share of aggregate income.

Let’s look at some real numbers, too. From 1982 to 1992, the upper limit for quintiles 1-4 rose 4%, 6%, 9%, and 11% respectively. The lower limit for the 5% of income-earners rose 14%.

This may be a gross simplification, but if there were any doubt in your mind that supply-side, “trickle-down” economics truly is “voodoo” economics, just look at the effects. The highest-earners raked it in while everyone lost out. It’s true that all incomes rose over the ten year period, but with inflation, those increases are either negligible or are in fact decreases.

That isn’t to say that trickle-down economics doesn’t work. It’s very effective at redistributing the income and wealth of this nation to the highest-earning and wealthiest Americans. It’s very effective at earning Republicans $2000 checks from a grateful wealth class. It just doesn’t do jack shit for the economy, and anyone who claims it’s Keynesian is full of shit.

What about Clinton?

Well, Clinton raised taxes on the wealthiest, but you will notice that this has little negative effect on income share for the highest-earners throughout Clinton-Gore. So either they didn’t raise taxes high enough, or they raised taxes on wealth (capital gains, etc.), or the economic expansion and tech bubble mitigated the tax increases, or higher-paying jobs generally saw faster wage inflation than lower-paying jobs.