Saturday, August 6, 2011

Letter to WSJ on their "More Medicare Cuts" editorial

Chicago PM Friday 6 August 2011

Editors, The Wall Street Journal


The Wall Street Journal Review and Outlook “More Medicare Cuts” of Thursday 4 August does as fine a job as can be expected explaining “the debt deal's health-care bookkeeping,” concluding “The only durable way to control long-run costs without hurting patients is a reform agenda akin to Paul Ryan's 'premium support' plan", and “reformers need to continue their effort to persuade voters that it is a better option than all the others.” Voters are obviously the last word in this discussion, but because of the Current tax Payment act of 1943, are all but completely removed from the situation at the most crucial point, their personal bank accounts.

Medicare is paid out of the US general fund, which got its biggest boost in history from the ratification of the 16th amendment, requiring every citizen to send a check to the Treasury every March 15 to pay a tax on their annual income. This link was broken by the 1943 act moving the check writing responsibility from the 90% of individual voters who are wage earners to employers. If the check doesn't get to the feds, the employer goes to jail, never the wage earner.

Since every employer is required to send in this tax, they have no competitive incentive to do anything other than add it to the price of their product, resulting in the 2011 Statistical Abstract of the United States showing 37% of all personal income taxes came from employer bank accounts, not voters'. So we end up with 1/3 of all federal income ($2.345 trillion in 2009) coming from a silent, painless national sales tax.

Fixing this scam would not need a Constitutional Amendment, only a House majority, 60 Senators, and a President with backbone enough to change the US Tax code from "every employer making payment of wages shall deduct and withhold upon such wages a tax..." to "every employer making payment of wages shall pay all of those wages to the employee...." The employer would still calculate the tax, including a note: "Here is how much the feds are expecting you personally to send in within 30 days."

Requiring individual wage earner/voters to write checks to the feds for 20% of their take home every month would go a long way to convincing them that sensible legislation like Paul Ryan's would be a vast improvement over the unsustainable mess we have now.

Arnold H Nelson in Chicago

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