Since one never knows exactly what the general reaction to these weekly posts is, as they may go unread, be quickly discarded or sent to Spam, reply e-mails and published comments are always welcomed and appreciated. However, when readers go to the trouble to mail printed documentation to either support or refute a point made in my postings, it signals that I have hit a nerve. Such was the case recently when issue was taken with my thoughts on heath care ("American Health Care - Laudatory But Extravagant" on 09/06/10) and taxes ("Ironies of Ironies" on 09/26/10).
In the first instance, my dear friend Judy was quick to challenge my statement that our health care system "was the finest in the world". To support her thesis that it is not, she sent me a copy of an article by T.R. Reid from the August 23, 2009, edition of The Washington Post entitled "5 Myths About Health Care Around the World" which are summarized below based on the author's worldly travels, with #5 presenting the most salient argument against the above characterization.
1. It's all socialized medicine out there. Not so.
2. Overseas, care is rationed through limited choices or long lines. Generally no.
3. Foreign health-care systems are inefficient, bloated bureaucracies. Much less so than here.
4. Cost controls stifle innovation. False.
5 Health care has to be cruel. Not really. Here the author concludes that due to the patch-work for profit nature of our health care system in the U.S. compared to others around the world, which are designed "only to pay people's medical bills", we have ended up with a system that "punctures the most persistent myth of all that America has the finest health care in the world". The rationale is that "almost all advanced countries have better national health care statistics than the United States where "700,000 Americans are forced into bankruptcy each year because of medical bills". My definition was more centered on physical facilities, doctors and technology with no consideration as to the cost burden, but you be the judge.
Now to taxes, a more complex and arcane subject to debate. Another old and dear friend, Charlie, sent me a packet of graphs, statistics and newspaper articles that I am still digesting, but I think his main rebuttal is that based on the latest IRS tax data of 2007, which predates the latest economic downtown, the top one percent of taxpayers paid over 40% of the federal income taxes collected, the highest among all groups, even though it was at an average effective tax rate of only 22.45% (see comment on effective versus applied tax rates below). Further, this data also points out that the top 50% of all taxpayers paid over 97% of all taxes collected, with the bottom half paying only 3% of the total taxes at an effective tax rate rate of the same 3%. So what? Isn't that the purpose of a progressive income tax schedule - i.e. for higher income earners to pay a higher rate of tax? That is exactly Warren Buffett's argument which was referenced in the Irony of Ironies blog of September 26th. Also, the above data just confirm another point made in that same blog that the effective tax rate paid by the wealthy is much lower than the applied tax rate because of tax credits and deductions allowable under the tax code. However, if you go to their website at http://taxfoundation.org you will see that based on the most current data of 2008 that previous 40% of total tax paid by the top 1% dropped to 38%.
Another point made by my friend came from an article by Walter Williams in the October 5th issue from I assume the Wall Street Journal, his favorite publication, that makes the case that all corporate tax increases and policies which restrict capital formation ultimately hit the middle class in the form of either increased prices, reduced dividends or layoffs. Consequently, Mr. Williams' opinion is that capital gains taxes, low depreciation and corporate taxes do not "serve the interests of workers, investors and consumers", and, therefore, we might be "much richer" without them. He may be right if getting rich is the main purpose in life, but what's not mentioned in that article are the other alternatives corporations have to the three options he mentions including reducing extraordinarily high executive compensation which is now a reportedly 300 times that of the average worker, curbing extravagant and unnecessary business expenditures and investing some of the trillions of dollars they have now accumulated in R&D and new technologies to enhance productivity.
All of this is to say that health care and taxes are tough issues to get one's head around, and there are many differing opinions as to the best approach for structuring both.
Growing national debt still at http://usdebtclock.org.
Laura Raborn at http://paintingsofhome.com and http://claygifts.com
Jim Johnson at http://yessy.com/jimjohnson/gallery.html
Russ Powell at http://powellphotos.com
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Tom Herrin at http://tommysart.blogspot.com
Matt McLeod at http://email@example.com
Artists Registry at http://www.arkansasarts.org/programs/registry/default.aspx
Sandy Hubler Fine Art at http://sandyhublerfineart.com
George Wittenberg at http://postcard-art-gallery.com
Local Colour Gallery at http://localcolourgallery.com
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Cantrell Gallery at http://cantrellgallery.com
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UALR Gallery Program at http://ualr.edu/art
Gallery 26 at http://gallery26.com