How to Defeat and Defend the Surtax

By Justin Miller

The health care debate is about to become a tax debate now that House Democrats have unveiled their health care plan that would levy a new tax on 2 million Americans.

Politically, this means Democrats are proving the stereotype true as the tax-raising party, and it will give the GOP a chance to strike and Democrats the need to fight back. At risk is landmark health care reform and part of the voter coalition President Obama rode into office.

Republicans may argue against the bill on the basis that it simply raises taxes on individuals that gross more than $280,000 or households that gross $350,000. That's a necessary but insufficient argument against the tax because Democrats are arguing this isn't just a tax, but a fee to be paid in return for a service: health care.

Instead, the GOP can crunch the numbers for the tax rates, which go from 1 percent up to 5.4 percent for those earning more than $1 million. Using those totals, Republicans may simply say to the potential surcharge payers: with the money the government is going to take, you could pay for your own health care plan, a better plan, or a range of surgeries.

Furthermore, Republicans can try to sever the fee-service analogy between the tax and the health care plan. That's because the tax is intended to raise revenue to be used by the federal government to pay for coverage for the uninsured. In other words, the GOP could say: you aren't going to get this money back in federal health care coverage.

Democrats can counter by also appealing to peoples' self interests and sympathies.

Democrats could argue that the surtax will benefit those who pay it by expanding coverage to all Americans, which will help reduce health care costs across the board because it will make the system more consistent and stable, as The New Republic's Jonathan Cohn recently wrote.

The party can broaden its argument into one about charity and shared sacrifice by appealing to high-earners' sympathies with the uninsured. With millions of Americans out of insurance in the worst economy since the Great Depression, Democrats can ask their tax targets to sacrifice the cost of a vacation to give everyone in America health insurance.

The important political question to both sides is how far Democrats and Obama can go in taxing part of their constituency. Throughout the election, Obama promised to raise taxes on those who earn more than $250,000 and received 52 percent support among those earning more than $200,000. Now that this promise is becoming reality, during a grueling recession no less, will Obama be able to convince these voters to dig deeper into their pockets? Or will the health care bill start a Republican resurgence among their traditional base of wealthy voters?

This article available online at:

http://www.theatlantic.com/politics/archive/2009/07/how-to-defeat-and-defend-the-surtax/21373/