A 10 percent VAT would pay for the voucher and tax credit. Over time, the VAT could be expanded to cover the costs of other federal health programs, making real income-tax reform, including significantly lower rates, a possibility.
A VAT earmarked for health care would help slow health-care costs because, if health spending continues to grow unabated, the VAT rate will go up and up, building pressure on politicians and health-care providers to restrain costs. This dynamic contrasts with the current system, in which many people think that health insurance is almost free, paid for by employers or the government.
A new tax might sound like a political fantasy, but an outspoken advocate of this approach has been Ezekiel Emanuel, the brother of Obama Chief of Staff Rahm Emanuel and an adviser to the president on health care.
The worst thing we could do would be to create another expensive health-care entitlement without figuring out how to pay for it. That would be hazardous to our children’s health.
• Len Burman is director of the Tax Policy Center and an institute fellow at the Urban Institute.
By Douglas Holtz-Eakin
The young drop coverage to avoid higher premiums
Independent voices from the TWT Communities
Join the Communities and submit your column in response to one written, or on something totally new and unique. We want to hear from you
Health care reform, organized medicine, physician practice management, and patient care--a real time look at the challenges facing doctors and patients in America today.
Benghazi: The anatomy of a scandal
13 Photos
Vietnam Memorial adds four names
18 Photos
Cinco de Mayo on the Mall
11 Photos
NRA kicks off annual convention
8 Photos
California wildfires wreak havoc
37 Photos
