Let's Tax the POOR to provide services for the MIDDLE CLASS...

I was on Sunday Square Off last month with Democratic Diva Donna Gratehouse and she complained that Arizona has a regressive tax system.  My response was that if Democrats don't like a system in which the poor pay a higher percentage of their income in taxes than do the rich and middle class, then the Democrats should stop proposing tax increases on the poor that are used to provided services to the middle class.  It's pretty simple really.

Take the Tobacco tax.  We know that the poor smoke in disproportionate numbers.  We also know that the poor already qualify for AHCCCS.  So when folks like the Bashas propose to increase tobacco taxes in order to expand AHCCCS eligibility, they are raising taxes on the poor and the benefits (by definition) go to those who are not poor.

That's fine with me it you want to propose it.  Just stop whining about how unfair it is.

Now the Hospital association has a proposal that will undoubtedly be regressive, undoubtedly supported by the state's Democratic Leadership...and whose results will undoubtedly be whined about as "unfair."

The Arizona Hospital and Healthcare Association is working with consultants on an initiative it hopes will make it to the ballot in November. It would raise money to stop the state from cutting more than 310,000 people from the Arizona Health Care Cost Containment System, the state's Medicaid program.

Exactly what form the proposed levy would take has yet to be worked out. Laurie Liles, the association's lobbyist, said consultants and pollsters are looking at what kind of tax would be most palatable to voters. Historically, voters have been particularly receptive to taxing cigarettes; the total levies on those are now $2 per pack.

We don't know what items are going to be taxed, but you can be sure that it's cigarettes, alcohol, soft drinks and a host of other items that the poor consume at a disproportionately high rate.  And who does the money go to?  The 310,000 people who would otherwise be removed from the AHCCCS roles.  And since there are about 1.3 million people on AHCCCS*, those 310,000 represent the highest income tranch of the current AHCCCS population. 

Of course, the proposal isn't really about the poor vs. the middle class.  The proposal is more about the financial security of the hospitals.  Of course, that shouldn't surprise you much...after all, the proposal is from the Hospital association. 

Post Script:

Folks from Donna to Warren Buffett have done a great job equating "Regressivity" with "Fairness."  After all, why is it fair that a guy living in poverty pays a higher percentage of his income in taxes than a guy living in Paradise Valley?  That sounds like a good argument, but it's actually a statistical and rhetorical trick.

Take the guy who lives in poverty.  He pays very little actual tax--primarily on tobacco and if he lives in Phoenix a new sales tax on food.  He probably pays no income tax or property tax.  Of course, what little tax he actually pays can look like a fairly high percentage, because he has almost no income.

But what does he get from the state?  Well, if his kids are in school, the state pays about $8,000 per year per kid to educate them and his family has free health care that's worth another $5,000 to $10,000 a year.  So if he has 3 kids, he receives about $30,000 a year in direct services from the state.

And the guy in Paradise Valley?  He gets the same basic services that the poor guys gets, but he surely has health insurance and his kids are likely grown, or they went to private school.  So he pays income taxes and property taxes and gets almost nothing in services while the poor guy pays taxes on his cigarettes and gets $30K a year in direct benefits.

That's fine with me.  We live in a democracy and the people say that wealthy people should pay more so that poor people have a better standard of living.  I'm OK with that.

But stop whining that it's unfair!  Stop telling the poor guy with his free school and his free healthcare that he's being abused by the process because he pays $2 a pack tax on cigarettes.  And stop lecturing my about how heartless I am to support such an unfair system.

Finally, if you think it's bad that poor people pay a higher percentage of their income in taxes...stop supporting tax increases on poor people.

Footnote:  There are currently about 1.4 million people on AHCCCS.  When I was in the legislature, there were about 80,000.  Over the last 20 years, the system has morphed from a safety net for the poor into the preferred form of insurance for 20% of the state's population.  That policy shift has had remarkably little debate.   

Comments

[turned down]

The threshold for AZ healthcare is less than $675 US per month, (as reported by the individual, meaning IRS wages NOT cash). Noting this we can see that the day laborer etc. can easily 'game' the system. You are correct to state that this affects the HC industry in AZ, however it will force all of us to decide if we are 'willing to pay more for a better Arizona' ( to copy a bumper sticker slogan from the workers paradise in MN). Reality? No thanks, get your own, comprende!(taxpayers of AZ).

[James L.]

Good post Greg. BTW-You have a dollar sign in front of the number of current enrollees in AHCCCS.

[prm]

Greg, what is the demographic of that 20%?

[Thane Eichenauer]

IMO the issue isn't progressive vs. regressive, the issue is controlling people. Government is a tool that allows those that thirst for control to make their wishes come true.

[Mark Smith]

re: AHCCCS = preferred insurance

Just last night my wife returned home from a gathering of friends, and was bothered by the comments of another young lady she had met there regarding AHCCCS. This lady's husband is a full-time grad student, and although she has no children to take care of, she explained that she has chosen to no longer work. She was in the workforce for a few years, but now she's done working. She just stays at home.

They use student loans to live on, and for health insurance? AHCCCS, of course! AHCCCS provides this gal a disincentive to pursue employment. AHCCCS is, in fact, the preferred insurance for her because she chooses it over having to earn money to buy her own insurance.

What bothered my wife was that, as taxpayers, we are paying for this gal's health insurance. Even though with our own money we try to be responsible, stay within our budget, and not spend money on things we don't need, we are paying for this lady's choice to sit in her pajamas all day and watch soap operas. But it's not only through taxes that we are subsidising her choice. As the controller for a medical group I know that AHCCCS/Medicaid does not pay enough to cover the actual direct costs of health care; the remaining slack in the overall system has to be picked up through private insurance. What this means is that anyone who pays for medical insurance is subsidizing AHCCCS/Medicaid patients with their insurance premiums in addition to the taxes they pay. With such a subsidy, maybe that's why it has become the "preferred form of insurance" for at least some folks.

[The alternative]

Everyone is a car accident away from medical bankrupsy. Sad someone found a person who should have an opportunity to work out of poverty and chooses not to in order to keep their health insurance.

So the question remains, how many of 1.3 million people on Medicaid in AZ deliberately choose health coverage over an available job and they would rather sit at home broke with their insurance card?

Meanwhile another one million without insurance either willingly or unwillingly gamble, few probably have enough in the bank to cover a minor surgery.

Beyond the social studies, bottom line when it's your time to go to a hospital and it's Black Friday at Best Buy with a 5-10 hour wait, you'll have plenty of time to think about how many of the people don't belong there, but are because they don't have insurance.

[Zelph]

Are you and your readers aware that about 20% of the families in Arizona are below the poverty level? I didn't think so.

http://www.statehealthfacts.org/

I realize that these sort of facts don't matter as much to you folks as anecdotal stories about welfare queens. It's a disease of modern conservatism.

BTW, I agree with you on one point: we shouldn't rely on regressive taxation to fund health care coverage for the poor. Much better to restore the state income tax rates for the wealthy to their pre-Symington levels. I heard the AZ Hospital Association is doing some polling on increasing income taxes on the wealthy like they did in Oregon. Arizona voters just might like this idea. What do you think?

[Donna]

Hi Greg,

Small point of correction: I am often identified as *the* Democratic Diva because I write most of the posts but we are a group blog. I am but one of the Divas. Thank you.

[Winnie]

Greg has just clearly distanced himself from conservatism, if not the entire American political tradition, with this line:

"We live in a democracy and the people say that wealthy people should pay more so that poor people have a better standard of living. I'm OK with that."

Greg, try to get through a copy of the Federalist Papers - you know, that owner's manual for the Constitution - and reconcile your view with that of the Founders and the nation they created. Hint: You can't, because it's not a democracy, and those guys went to great lengths to prevent tyranny by the majority.

[ron]

Greg, I agree - they should put taxes on spa treatments at the resorts and at the those animal spa places in Scottsdale.

Ron

[Matt]

To spread out taxes and make them more "fair" we should tax things that the middle/upper class make more use of.

So, I propose additional taxes on the following:

Sporting events (proffessional and college)
Racing vehicles (per vehicle, collected at the venue, per event)
Recreational Vehicles (whether registered in state or out of state)
Handicap Parking slots (tax the stickers and business per slot)
Recreational Livestock
Conferences, Fairs/Carnivals, Expo's etc.
Sun Block
etc.

The state legislature needs to get creative on items to tax.

[Jim Torgeson]

Um, no. The state needs to get creative on how NOT to tax.

I agree that sales tax, especially on food, is the most regressive tax ever thought of.

Here's the problem in a nutshell; anti-tax conservatives made a deal with the devil (Nappy) to expand the size oof gov't in exchange for some paultry tax cuts. Today, gov't is too large by about that same increase.

Let's sell some land, consolidate some school districts, think outside the tax and spend box.

Ingenuity makes us great, not government programs.

[Matt]

That could be seen as the crux of the problem. The politicians (both parties) see the current budget problems as being of not enough income instead of one of to much spending. I am confident the budget crisis could be solved by reviewing programs one, by one and evaluating their benefit vs cost.

[RonJ]

America has the richest poor people in the world--cars, HD TVs, dishwashers, cell phones, etc. When you incentivize the "poor" with welfare you get more "poor." If you want to see real poverty, travel outside the U.S. We have a bunch of career/multi-generational "poor" families, many with no incentive to better themselves. Despite trillions of dollars spent on the "War on Poverty," we have made little, if any, progress. We need to get the government--especially the feds--out of the welfare business. The U.S. Constitution says "promote the general welfare," not provide individual welfare. Let the faith communities and the charities work their miracles.

[Robert Woodman]

If Barbara Bush's moment of glory in the Astrodome after Hurricane Katrina was not enough proof already, this post and many of the subsequent comments are the final proof. The words "compassion" and "conservative" cannot be juxtaposed. There is no such thing as compassionate conservatism. The disgusting displays by Jim Bunning and John Kyl in the United States Senate in the last two weeks only add another chapter of irrefutable evidence. Conservatives hate poor people.

The attitude that permeates this post and the following comments is beyond just contempt for and false assumptions about poor people. It descends into outright hatred. The Republican party cannot free itself of one of its most basic and cherished beliefs: poor people are all fat lazy slobs who drink and smoke too much, don't want to work, and prefer to mooch off the hard earned money of others.

There is no such thing as a poor person who neither smokes nor drinks? There's no such thing as an unemployed person who lost his or her job through no fault of their own? Who is trying their best to find work? Who shows up at a place of employment with job openings posted only to find a thousand other people there waiting to put in their applications? Of course not. They're just lazy. The two hundred dollars a week in unemployment compensation is a great deal for them, almost as good as getting to live in the Astrodome for a few weeks. In the gospel according to John Kyl, it's a "disincentive" to seeking work. Poor people "prefer" AHCCCHS to other forms of insurance. According to Mr. Patterson's gospel of bigotry, the poor even drink too much soda pop.

The attitude of contempt and blame and superiority reeks to high heaven. It is utterly and completely irreconcilable with the teachings of Jesus of Nazareth. "Be compassionate as God is compassionate." " All they asked was that we should continue to remember the poor, the very thing I was eager to do." The greater question posed by this attitude is how on earth people holding such hateful and bigoted notions about poor people can go to church on Sunday morning pretend to be followers of the Messiah and Son of God who proclaimed a gospel of compassion.

Just to ask for one tiny piece of rational argument: how does it follow that a tax on alcohol is regressive and soaks the poor? How much tax does a poor guy pay on a six pack of Bud Light at Circle K? How much tax does the rich guy in Paradise Valley pay when he buys 30 dollar bottles of Chardonnay, 60 dollar bottles of premium liquor, and pays $8.50 a pop for Cosmopolitans at his favorite Snotsdale nightclub? The argument that a tax on alcohol is regressive and hits poor people harder than rich people only holds true if you believe that poor people are all just lazy indulgent slobs. It is not rational and is not supported by any facts or research.

To give the post some credit, it does break new ground. Never, ever before in my life have I heard that poor people drink too much soda pop and been told that a tax on soda pop would hurt the poor more than the rich. Now that's something new.

Whatever you do unto the least of my brethren, you do unto me.

[turned down]

Hi Robert,
NEWS FLASH! A friend who qualified for ACHHHS had a 'crisis' and couldn't get her teeth fixed, so ACHHHS found a dentist who would do the cosmetic work. AZ tax dollars at work :)

ACHHHS is totally bogus!

[David Cantelme]

Robert:

No one has the corner on doing what's right by our fellow man or woman in need:

“This holiday season is a time to examine who’s been naughty and who’s been nice, but I’m unhappy with my findings. The problem is this: We liberals are personally stingy.

“Liberals show tremendous compassion in pushing for generous government spending to help the neediest people at home and abroad. Yet when it comes to individual contributions to charitable causes, liberals are cheapskates.

“Arthur Brooks, the author of a book on donors to charity, “Who Really Cares,” cites data that households headed by conservatives give 30 percent more to charity than households headed by liberals. A study by Google found an even greater disproportion: average annual contributions reported by conservatives were almost double those of liberals. . . .

“Conservatives also appear to be more generous than liberals in nonfinancial ways. People in red states are considerably more likely to volunteer for good causes, and conservatives give blood more often. If liberals and moderates gave blood as often as conservatives, Mr. Brooks said, the American blood supply would increase by 45 percent.

“So, you’ve guessed it! This column is a transparent attempt this holiday season to shame liberals into being more charitable. Since I often scold Republicans for being callous in their policies toward the needy, it seems only fair to reproach Democrats for being cheap in their private donations. What I want for Christmas is a healthy competition between left and right to see who actually does more for the neediest.”

Nicholas Kristof, “Bleeding Heart Tightwads,” NEW YORK TIMES, Dec. 20, 2008, http://www.nytimes.com/2008/12/21/opinion/21kristof.html

“A root problem is a liberal snobbishness toward faith-based organizations. Those doing the sneering typically give away far less money than evangelicals. They’re also less likely to spend vacations volunteering at, say, a school or a clinic in Rwanda.

“If secular liberals can give up some of their snootiness, and if evangelicals can retire some of their sanctimony, then we all might succeed together in making greater progress against common enemies of humanity, like illiteracy, human trafficking and maternal mortality.”

Nicholas Kristof, “Learning From the Sin of Sodom,” NEW YORK TIMES, Feb. 27, 2010, http://www.nytimes.com/2010/02/28/opinion/28kristof.html

[RonJ]

Robert, and the rest of you bleeding heart liberals: Please read (perhaps for the first time) the United States Constitution. You promote the trampling of my rights to secure my liberty and happiness by your constant demand to take much of my hard-earned money and give it to someone who did nothing to earn it. I reserve the right (my God-given right, supposedly guaranteed by our Constitution) to use my property to care for, first, my family, and then whomever I want to share my bounty with. Not to have it taken at the point of a gun (government mandates) and give it to someone the government deems in need. I give more than 10% of my income to charitable causes every year, and have done so since I earned my first dollar. I doubt--in fact, I know--the vast majority of you liberals don't even come close to doing that. Now, what was that silly comment about "compassionate conservatism?" You owe us all an apology for your self-righteous, ignorant dribble.

[nick]

ZELPH,

Like the disasters at Freddie and Fannie we
shall see what the DIMOCRAT passage of tax the rich in Ore egone does to the economy
when rich persons can move accross the river
and pay no income tax in Washington!

I can state tax the rich has not worked in
Kalifornia. Unlike Ore egone all 58 Kalifornia counties voted against increased taxes in the 2009 election.
That includes the extreme liberal San Francisco and LA counties.

[Jim Torgeson]

Was that English?

[arizona workers compensation insurance]

This issue is a very serious one..I have one question,why is it that democrats kept on proposing higher taxes on the poor?I think that too unfair..My goodness..

[Clark]

The only way to truly limit the power of government is to limit its ability to tax. Here in TX, the state government does not have the ability to levy an income tax, and we are doing just fine. In fact, we are running a budget surplus. Maybe AZ should consider the same idea.