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SB 177: Delaware Single-Payer healthcare reform to be funded by regressive tax hikes!


Among the dirty little secrets hidden away in Senate Bill 177, which would establish a single-payer healthcare system in Delaware is the manner in which it is to be funded.

They've got to raise a lot of money to have the government take over approximately 11% of the state's economy.

In 2003 the total health care expenditures by Delaware citizens, according the UD's Center for Applied Demography and Survey Research was $5.044 BILLION, a figure that has arguably risen to at least $5.45 billion today. (This is a low figure, by the way, as it does not completely capture the money Delaware citizens spend for healthcare out-of-state at places like Temple, Penn, Johns Hopkins, or Sloan-Kettering.)

Of that, again according to the Center for Applied Demography and Survery Research, Delaware citizens paid an average of $2,310 out-of-pocket costs for health care in 2003. Most of this went to premiums, co-pays, pharmaceuticals, and dental services (which are reimbursed by insurance at a much lower rate than health insurance).

One of the funding mechanisms that the authors of SB 177 intend to use to fund a single-payer healthcare system is:

All head of households and persons subject to Delaware's income tax shall pay a Health Security income tax of 2.5 percent of taxable income.


Delaware's current state income tax is a progressive structure with rates that begin at 2.2% and rise to 5.5% for income under $60,000, and 5.95% for income over that level.

An across-the-board 2.5% income tax rate increase to pay for this reform will MORE THAN DOUBLE the tax rate paid by our poorest tax-paying citizens.

Ironically, this is not only unfair but actually gratuitous.

Go back to that $5.45 BILLION dollar tab for health care in Delaware. In 2005 the state income tax only raised a grand total of $882,472,000 (link). So that 2.5% increase in the tax rate will bring in (very roughly) another $290 million--about 5.3% of the funds necessary to run this socialized nightmare system. Only about 10% of that will actually be brought in by the new regressive taxes on our poorest 20% of state taxpayers.

So the insult added to the injury is that single-payer advocates intend to dramatically raise taxes on the poorest of our tax-paying citizens only to raise a statistically insignificant amount of money.

This is fiscally sound statist government at its best, hey?
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