Former Vice President Joe Biden warned at Wednesday night’s debate in Detroit that middle class taxes will go up under the healthcare plan California Sen. Kamala Harris has proposed.
Harris says she has a way to pay for her Medicare-for-All proposal, which she unveiled on Monday, without raising middle class taxes. That’s clearly her intent. But economists have questioned some of the financial assumptions underlying her proposal.
The tax increase has been a key knock on Vermont Sen. Bernie Sanders’ Medicare-for-All bill, which Harris has co-sponsored in the Senate.
Both Biden and Harris are relying on healthcare cost and savings projections over ten years in the future. But some noted healthcare economists have questioned whether Sanders’ plan — and by extension Harris’ — present too rosy a financial picture.
“One of Senator Sanders’ options is to tax households making above $29,000 an additional 4 percent income-based premium. I believe this hits the middle class too hard,” Harris wrote in a post on the web site Medium on Monday that lays out her plan. “That’s why I propose that we exempt households making below $100,000, along with a higher income threshold for middle-class families living in high-cost areas.”
Instead, Harris says she would pay for her plan by, among other things, taxing Wall Street stock trades at 0.2 percent, bond trades at 0.1 percent, and derivative transactions at 0.002 percent.
“Think of it like this: that’s a $2 fee on a $1,000 trade by investors and big banks,” she writes. “I would also end foreign tax shelters by taxing offshore corporate income at the same rate as domestic corporate income.”
Harris says those taxes “would raise well over $2 trillion over ten years, more than enough to make up the difference from raising the middle class income threshold” as it appears in Sanders’ plan. She would also raise taxes on the top 1 percent of income earners, and tax capital gains at the same rate as ordinary income.
Many healthcare economists, however, have raised questions about whether the Sanders cost estimates are accurate. So if Harris is using that as a model, she may, too, come up short.
As Biden noted Wednesday night, the price tag for expanding Medicare to the entire American population is estimated to be more than $30 trillion over ten years. While supporters like Sanders and Harris say new taxes — either from Wall Street or American taxpayers — would pay for part of it, they are also assuming large cost savings as a result of lower administrative fees and reimbursement to providers.
A number of academics have publicly expressed doubt the savings will be as large as those lawmakers project.
Harris argues in her Medium essay that a longer phase-in period will help. Instead of four years, like Sanders’ legislation, Harris would give the country 10 years to transition to Medicare for All. And she observes in her Medium post that if the United States does nothing over the next decade, healthcare costs “will skyrocket to an estimated $6 trillion a year,” something she reiterated on Wednesday night.
“We must act,” Harris argued. “My plan is about immediately being able to sign up and get people into coverage.”