The Absurdity of Tax Day

April 15, 2010 in Misc by RangelMD

Sure, Federal income tax is absurd. It’s a regressive tax system instead of a flat tax system that ensures that the “rich” are taxed more than their fair share.

In 2006 (the latest data available), the 40% highest earning American Households paid 86% of Total Federal Tax Liabilities. The 60% lowest earning households paid just 14%.

And although Americans are not taxed at the higher total rates seen in many European and Scandinavian countries, the average US tax payer certainly does not see as many benefits as most European tax payers. Where is my month long August vacation with pay?

Then there is the absurd way that doctors who accept Medicare and Medicaid are taxed. That’s right. Our Medicare/Medicaid income is taxed in the same lunatic way that social security benefits are taxed even though these benefits were already derived from income taxes.

Given how little the average Medicare beneficiary has already contributed from their income over several years to decadesĀ  vs how much the average Medicare beneficiary actually consumes in modern expensive health care, a large percentage of Medicare funding comes from fresh tax sources and as you have already read above, most of the fresh tax sources are the 40% highest earning Americans.

In other words, a large percentage of a physician’s taxes get recycled into public insurance reimbursements for Medicare and Medicaid and then that income is itself taxed and so on and so forth. That money doesn’t get injected into the economy, it just cycles around and around the Federal bureaucracy generating administrative processing costs. Crazy, no?

Today also happens to be yet another deadline for when the 21% cut in Medicare reimbursement kicks in. I have a proposition for Congress. Let the 21% pay cut become permanent and introduce a bill to exempt income generated from caring for Medicare and Medicaid patients from Federal income taxes. I think it’s more than a fair trade off. And maybe Congress can begin to slow the decline in providers who accept government health insurance.

Please share.