A misconception coming out of the debt-ceiling debate is that our debt problems would be solved if we raised taxes on the wealthy. If only it could be so simple.
According to the 2009 Social Security and Medicare Trustees Report, the unfunded liability (government IOU’s) of Social Security and Medicare was $106 trillion. In order to pay for these entitlements, the CBO estimated that the lowest marginal tax rate of 10 percent would have to rise to 26 percent, the 25 percent marginal tax rate would have to rise to 66 percent, and the top tax rate increased to 92 percent!
Who would bother rolling out of bed in the morning knowing that 66 percent to 92 percent of your daily wages were going to the federal government? Our economy would collapse under the weight of such a heavy tax burden.
The 2011 Trustees Report estimates Medicare liabilities to be much lower than in previous years, due to reforms under the Affordable Care Act. These reductions are based on the improbable assumption that physician reimbursements will be cut by 30 percent, and hospital payments will drop below Medicaid rates.
So, even if Congress took Buzz Lightyear’s motto and raised taxes "to infinity and beyond," we will not solve the debt crisis or stop massive cost-shifting to Americans with private insurance.
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Maria K. Poirier
Rochester
