Nunez, Schwarzenegger Bring Us An Incredibly Terrible Health Plan (Sirens Flashing Alert)

Flash Report ^ | 12/17/2007 | Chuck DeVore

[goldstategop]

in·cred·i·ble –adjective

1. so extraordinary as to seem impossible: incredible speed.

2. not credible; hard to believe; unbelievable: The plot of the book is incredible.

—Synonyms: farfetched, astonishing, preposterous.

"It's an incredible plan," said Assembly Speaker Fabian Nuñez (D-Los Angeles).

The Speaker’s quote about the just-struck agreement on government healthcare with Governor Schwarzenegger unintentionally speaks volumes.

Incredible, farfetched, preposterous, hard to believe – call it what you will, the plan will cost far more than advertised and will drive business out of state, reducing state tax revenue and throwing people out of work.

Beginning with a low-balled $14 billion price tag, the plan to increase taxes on business, hospitals, and tobacco to provide health insurance to 3.6 million people will devastate an already unsteady economy. California’s budget already has a $14 billion hole in it, thanks to a complete lack of spending discipline and a housing boom gone bust. Adding massive new taxes and a massive new social welfare program will compound the problem and push California over the brink of financial disaster.

The State Assembly is expected to vote on the government health insurance plan late Monday night, December 17. It is expected that Democrats will push through the healthcare deal without the tax increases to pay for it, as new programs need only a simple majority to pass while new taxes require two-thirds approval of the Legislature. The higher hurdle for tax increases will force the Democrats and the Republican governor to punt the tax hike to the people as a ballot initiative, probably in the November 2008 election.

Governor Schwarzenegger and Speaker Nuñez intend to pay for this big increase in government with three new taxes: a $2.3 billion tax on hospitals, a $1.50 per pack tax increase on cigarettes, and a new payroll tax on business. Many hospitals say they want the new tax as they expect to get more than that back in insurance reimbursements. Of course, some hospitals would rather not be taxed, highlighting the fact that taxes are levied with the power of government compulsion. The latter two taxes are more problematic.

Taxing tobacco is always popular in health conscious California. The (happy) problem is that fewer and fewer Californians smoke every year, making this a declining source of revenue. Some analysts are already expecting that the new tax would have to be set at $2 per pack to make up for a declining base of smokers and a higher loss of tax revenue due to increased tobacco smuggling by criminal gangs.

The tobacco tax would be a mere annoyance compared to the havoc the payroll tax would wreck on business. The plan calls for small businesses with payrolls of up to $250,000, under 10 employees for most California businesses, to spend at least 1% on healthcare for their workers. If they didn’t, they would get hit with a payroll tax to fund a state-run health insurance pool. Firms with payrolls of up to $1 million would have to pay 4% of their payroll costs to healthcare while those with payrolls up to $15 million would have to pay 6%. Bigger companies would have to pay 6.5%. Such a payroll tax and healthcare cost mandate will severely distort market forces. It will encourage small business owners who already provide healthcare coverage to drop it in favor of the state subsidized system. It will also cap business growth since an employer could see a large increase in payroll costs with a commensurate drop in profit as their labor costs crossed a key threshold at $250,000, $1 million, or $15 million.

Even more discouraging is the fact that this new tax talk is occurring at all. Governor Schwarzenegger was elected and reelected on a no new taxes pledge. In 2003, the year of the recall, the Tax Foundation ranked California 44th in the nation on its overall state business tax climate. After the governor pushed along workers compensation reform and cut the car tax, California’s overall standing rose to 39th – a good start, but still far less friendly to businesses that provide jobs and pay taxes than any of our Western neighbors. Since then, California’s competitiveness has fallen so that our 2008 business tax climate ranking stands at an abysmal 47th – just ahead of New York, New Jersey, and Rhode Island.

The Tax Foundation, a national nonpartisan educational group founded in 1937, says California has the highest individual income tax rate in the nation with one of the most highly progressive tax rate structures in the nation. Most small business owners pay their business taxes at the rates for individuals, so this high tax comes at the price of discouraging entrepreneurship. Meanwhile, California’s corporate income tax rate is the highest among Western states, serving as a powerful inducement to relocate out of state. Our sales tax rate exceeds the national average and, even with Proposition 13, our property taxes are only slightly below the national average. Add these taxes up to the proposed new payroll taxes for healthcare and you get a formula for California having the worst business tax climate in the nation.

Thankfully, in addition to legislative Republicans, who have been left out of the sweeping healthcare deal between Schwarzenegger and Nuñez, a voice of reason has emerged from an unlikely source: Senate President Pro Tem Don Perata (D-Oakland). Perata, who supports most of the government healthcare plan, said he will delay a Senate vote on it until the Governor explains how he will close the ballooning $14 billion deficit without hurting the poor and disabled with healthcare cuts on existing welfare programs.

Polls show that Californians are satisfied with the quality of their healthcare. Our challenge is not with access to healthcare, but rather with how to pay for it. Organizations on the left, such as the California Nurses Association and the California Endowment, a billion dollar-plus nonprofit ostensibly created to fund healthcare for the poor, favor a total government takeover of the healthcare system. At the other end of the political spectrum, legislative Republicans have repeatedly called for applying free market principles to an over regulated industry. Republican proposals, never granted a full hearing, include allowing out of state health insurance to compete in the California market, promoting health savings accounts (California is one of only four states that taxes health savings accounts), and encouraging low cost healthcare clinics at retail chains as has been successful in other states.

California’s budget is collapsing under the twin pressures of unrestrained government spending and a tax code that punishes productive taxpayers with the highest income tax rates in America. This cannot continue. Business-friendly Nevada rates the 3rd best business tax climate in America; California ranks 47th. We need to cut tax rates, not increase them. Government must live within our means to pay for it. To do anything else would be incredible.

[goldstategop]

Sirens Flashing? Yes - with regards to the financial disaster ArnoldCare would impose upon California. It would push the state's economy over the edge. The only voices of sanity against this statist, tax n spend boondoggle are legislative Republicans and the Democrat leader of the state Senate. Go figure.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[Jeff Chandler]

I’m waiting for the enactment of laws prohibiting businesses from moving out of the state.

[Nachum]

I have only one question. Would Gray Davis have attempted to do this?

[Osage Orange]

I’m waiting for the enactment of laws prohibiting businesses from moving out of the state.

I'd believe taxes on leaving......for sure.

VERY, very glad I no longer live there........

[Signalman]

Don’t blame me. I voted for Tom McClintock.

[goldstategop]

Same here. Its amazing how California comes up with these wacky ideas at a time when it can't even pay its own bills!

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[OKIEDOC]

This Arnold Health plan is absolutely crazy.

It looks as though Arnold is trying to get in the good graces that encompass his radical left wing family ties.

Can someone tell me how Kalifornia proposes to pay for another boondoggle when we are already 14 to 18 billion in the hole?

Arnolds Health Care Boondoggle is supposed to cost somewhere between 14 to 16 billion and that is probably a very conservative ...oops conservative may not be a good word so lets use minimum.

Come on Kalifornia it may be time for another recall and if anyone will get up the petition drive I will gladly volunteer to be the first signer.

At Wally World the other day a man was sitting at a table in front asking for people to sign several petitions.

I heard several people tell him that they would refuse to sign any petition that even hinted of raising taxes or implementing a new stupid law on the environment.

The majority of the voters in this state have gone absolutely crazy.

The very thought of losing an entitlement is scaring the hell out of everyone.

I know it is easy for some to be for frivolous new laws and taxes for things we do not actually need when we all have good jobs and enjoy the good life.

However, many who have had this attitude in the past will soon rue their lack of taking care of their future.

This new health plan for illegals is absolutely nuts.

[goldstategop]

California employers would be very happy to shed their health costs to the state if they could. A moment's reflection should tell any one that far from saving the state money, ArnoldCare would saddle it with more liability. And guess who would be on the hook for it? The taxpayers! Sure, the Democrats can get this plan on the ballot but once its explained to voters the truth about ArnoldCare's massive price tag and tax increases in it - its going to go down in flames. And it will happen. Instead of fixing California's fiscal mess, the Governor and the Democrats seek to grow government more - with more spending and more taxes even though its obvious to every one its a stupid idea not only in its own right but also in fact that would do more harm than good.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[backtothestreets]

Astounding!

This is not a health care plan. It is an insurance scheme that will fleece California residents, assure politicians continued favors from insurance companies, and do nothing to increase the number of medical providers and services that would drive medical costs down and more affordable to all.

California government is failing financially, and the proposed health care plan will intensify those failings.

[OKIEDOC]

Well said and thanks for posting this article.

[goldstategop]

I actually think its a good thing. A bad idea and a good thing. I should explain. Its a bad idea because it does nothing to address the health care situation. But its a good thing because it lets people see close up for themselves the noxious brew called socialism.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[backtothestreets]

Although I haven’t seen it stated anywhere, I think Sacramento is being purposely steered toward a bankruptcy with the duel intent of rewriting the state constitution and receiving a federal government bailout.

Rewriting the state constitution would be an opportunity to scrap all tax constraints the voters have placed on state government. The bailout would make all 50 states share the burden of poor government financial planning in one state.

This is not a national issue yet, but people in the other 49 states had better take notice now and make their thoughts known.

[Always Independent]

Who has the dam recall petition?

[backtothestreets]

Another recall would be a band-aid solution offering temporary relief.

Although it hasn’t caught on just yet, I see a permanent solution the fiscal liberals could not stop: http://groups.yahoo.com/group/new_california/.

For now, I'll just keep the proposed solution on Yahoo for the time when most Californians are ready to take action.

[rockinqsranch]

Instructions from Teddy to Schwarzy via wifey?

Once upon a time California was the fifth largest economy in the World. Today the Seventh, or so last I heard. Yes one can say improvements in other National economies, but also due the assault on California by the Left.

[Little Ray]

It would be nice to see the PRK go completely into the toilet.

[socialismisinsidious]

Socialized Medicine aka Universal Health Care PING LIST

FReepmail me if you want to be added to or removed from this ping list.

[SierraWasp]

"Business-friendly Nevada rates the 3rd best business tax climate in America; California ranks 47th. We need to cut tax rates, not increase them."

I used to harbor the delusion that the business community in CA supported conservative common sense like it did in the days of Reagan's Governorship.

I've certainly pulled out of that unsafe harbor during the past decade with Wilson, Davis and Schwartzensocialist!!!

[writer33]

Nevada welcomes all California businesses. But you better move before they build the Great Wall of California to keep businesses and citizens in.

[budwiesest]

California’s budget is collapsing under the twin pressures of unrestrained government spending

Those are TWO significant pressures right there: government and spending. Then, add high taxes. That makes three. Now, add existing deficits (makes four) and you have a receipe for collapse.

I'm Rachael Ray and I approve this message.