“Do You Choose Life (The Affordable Care Act) or Do You Choose Money?” is a question you SHOULD be asking yourself and every single Democrat, Republican and Independent you know. Why? First, you cannot be truly pro-life if you are really only pro-birth and “turn away” the poor or medically infirm people in our society when they need healthcare services. In addition, you will learn about incentives or tax breaks in this country, along with the cost to our Treasury each year, and the impact it has on our federal budget! It’s going to give you something to think about. It may cause every conservative you know to become so frustrated with these facts, that when you present them, they might implode. For Democrats, it will give you renewed purpose and a clear picture of what is at stake and how to combat the comments about the “exorbitant” cost of The Affordable Care Act. It is time for all Democrats, Independents and even Republicans who are “pro-life” across the life cycle to “man up” and arm yourself with the facts about the costs of The Affordable Care Act versus the costs of tax breaks or incentives that people and corporations currently hold near and dear to their hearts within our tax code. In fact, by the end of this blog you will understand that the cost of The Affordable Care Act pales in comparison to the biggest tax breaks individuals, families and corporations currently enjoy.
The anticipated cost to the federal government for the Affordable Care Act and it’s tax incentives BEFORE any “revenue producing” parts of the bill are included is about 132 billion dollars a year. That sounds like a lot of money doesn’t it? No wonder, you may be thinking, the conservatives are “concerned” about the cost, right? That is what they do to convince Americans that The Affordable Care Act is dangerous and costly. They focus ONLY on the costs and don’t take into consideration the tax revenues that are associated with “entitlement” programs, only looking at one side of the balance sheet. Oh sure, you might be thinking, just like a Democrat, add to the revenue side and increase taxes. The truth is every single program, department and service funded by the government, whether it be a tax incentive or a tax break comes at a cost to the Treasury. All we ever hear about though, is the immense cost of so-called entitlements or social programs. However, as we are about to show you, the cost of the Affordable Care Act to the Treasury is pennies, yes pennies, when you consider the 3 top tax breaks Americans enjoy each and every year as well as large tax breaks and incentives given to big business and corporations. (http://www.bankrate.com/finance/taxes/8-tax-breaks-cost-uncle-sam-big-money-9.aspx):
- The first big tax break is the home mortgage interest allowance. Every year, people who own their homes are able to deduct all or part of the interest they pay on their home mortgage from their taxes. By the way the term, “home mortgage” is pretty loosely defined given it could be an RV or a boat that taxpayers include as an interest deduction. Seriously, a boat, are you kidding me? Now hold on to your seat, because this “little” tax break costs the federal Treasury 464.1 billion dollars per year in lost taxes. The home mortgage tax break costs the government 3X the amount of the Affordable Care Act and sure doesn’t save your life or improve your quality of life. However, there are those who will tell you that the mortgage tax break stimulates home ownership, which has a positive effect on the economy. We are not arguing the merits or consequences of each tax break, rather we are simply identifying the costs in comparison to the Affordable Care Act. The home mortgage tax deduction exists to encourage people to purchase homes, which is meant to stimulate the economy.
- The next big tax break is the capital gains and dividends deduction. Investments and the profit on those investments are often taxed at a lower rate, with the belief being that people will reinvest the savings into the economy. This impacts the federal government in two ways. First, due to tax savings to investors of up to 15% on their taxes, the government expects to lose 450 billion dollars of revenue to the Treasury in the year 2014. Also categorized as a capital gain or dividend reduction, the assets of people who die, are not all taxed, which ultimately benefits those who inherit the estate. This tax break costs the government over $200 billion each year. Finally, home sale profits, when reinvested into a new home, are not taxed which again is good for the taxpayer, but this tax break costs the government 123 billion dollars per year. The total then for the capital gains and dividends deduction accounts for more than 750 billion dollars per year, which is more than 5X the amount of the Affordable Care Act and again doesn’t save your life or improve your quality of life.
- Pension plans make up the third and largest tax break to the American people and families. Most full-time workers have some kind of a retirement program that they or their employer pays into, or a combination of both pay into with pre-tax dollars each month. In some cases, the employer pays into the retirement plan and the tax is deferred until the employee becomes retirement age. The retiree is taxed on the money they take out of the plan during retirement. This deferred tax costs the Treasury about $60 billion per year. Many companies have switched from an employer based contribution to an employee based contribution or some combination of the two. In this case the employee makes a contribution and the employer may or may not contribute to the worker’s retirement package. The taxes on the retirement funds’ earnings are deferred until retirement. This “tax break” costs the Treasury $364 billion per year. This tax break is in place to provide an incentive to the populace to save for their retirement, so that they do not just have to count on Social Security when they retire. The total cost of the three types of retirement plans to the US Treasury is 424 billion dollars per year which is nearly 3X the amount of the Affordable Care Act.
The data clearly shows that these three “best” tax incentives or tax breaks added together cost the United States Treasury more than 1.45 trillion dollars each year. That is twice the cost of what the Congressional Budget Office predicts the Affordable Care Act will cost over five years: 2014 through 2018. While this is overwhelming to say the least, there are other tax loopholes available to large businesses and the wealthy, in particular, Corporate Tax Breaks. Corporate Tax breaks or “perks”, as they are often referred to, account for about 180 billion dollars per year in lost revenues to the Treasury. (http://www.huffingtonpost.com/2013/04/15/corporate-tax-breaks-cost_n_3087972.html)
These corporate tax breaks include a tax deferral system for companies doing business overseas. Corporate profits held overseas are not subject to income tax because the tax is deferred. It should be noted that this deferment is INDEFINITE, going on forever. No wonder American companies keep shipping their business overseas instead of hiring American workers and reinvesting in companies right here in America. Why keep jobs in the United States when big businesses can earn record profits overseas, find lower labor costs and at the same time, pay no tax on the overseas profit? This tax deferment makes up almost one fourth of the total losses to the Treasury Department in corporate tax breaks each year. In addition, in 2010, when the United States was in the midst of recession, Congress voted to extend corporate tax write-offs instead of implementing a federal jobs program that would have put thousands if not millions of unemployed people to work on repairing our failing infrastructure. (http://www.govtrack.us/congress/bills/111/s3816)
Congress “killed” the Job Bill of 2010, in less than 10 days, saying it was too great of an expense, which is very hard to understand given the large tax breaks that corporations are provided to offshore jobs and profits. How does it make sense to give corporations a tax break for moving jobs out of the United States each year, but not fund a Jobs Act that could have employed so many and had a positive impact on our economy. American jobs would have helped this country rebound from the recession quicker and provided a means to repair our crumbling infrastructure. There is no explanation or excuse for giving companies a tax break when they move jobs out of the United States. It makes no fiscal sense UNLESS you consider the large lobbyist operation that corporations have in Washington D.C. Factor in the amount of funds being “given” to members of Congress for their campaigns and their PACS and we see the resultant tax breaks which benefit corporations and hurt our economy through the incentivized practice of off-shoring operations. A perusal of the top spenders in campaign donations clearly identifies many corporations who have large overseas holdings including but not limited to defense contractors and oil companies.(http://www.opensecrets.org/lobby/top.php?indexType=s&showYear=2013) This combined with The Citizens United ruling by the Supreme Court is a recipe for disaster for the American economy. “Citizens United v. Federal Election Commission, cleared the way for increased independent corporate and union spending during federal elections.” (http://www.reuters.com/article/2013/10/08/us-usa-court-campaignfinance-idUSBRE9970M320131008) This dramatic influx of money, into campaign financing” appears to have resulted in a government of the corporations, for the corporations and by the corporations as opposed to a government of the people, for the people and by the people.
An employee of the Federal Treasury, Jerry Tempalski studied tax cuts and tax revenues from 1940 to 2006 when the expansion of federal tax code and the highest tax increase took place and made an important discovery. (http://www.treasury.gov/resource-center/tax-policy/tax-analysis/Documents/ota81.pdf) The tax increases from 1940 to 1967 were due mostly to the cost of wars. World War II was paid for by a significant tax increase from 1940-1943. The tax increase in 1950 and 1951 paid the costs of the Korean War. The Tax Adjustment Act of 1966 paid in great part for the Vietnam War. While we have fought two major wars in the last 12 years, we have not had ANY tax increase to fund these wars. As a matter of fact, President George W. Bush cut taxes, while conducting these two wars, while keeping the cost of these wars “off the books”, which means he did not include the cost of the wars in the budget. Upon taking office, President Obama demanded that these costs be reflected in the budget. The cost to the American taxpayer for these two wars, the most expensive wars in history, stands at $3.1 trillion. That works out to about $35,000.00 per American family. (http://www.politifact.com/georgia/statements/2013/may/13/cokie-roberts/roberts-lays-out-financial-costs-modern-wars/) The same people who don’t blink an eye at the cost of these wars, are also the same people who find the cost of The Affordable Care Act “too expensive.”
It seems then, that in many ways, the United States has come to a cross roads:
- Do we value a home more than we value healthcare?
- What is the point of having a retirement plan if you don’t have health insurance to help keep you well into retirement and beyond?
- And finally, is it more important for corporations to be able to move their business assets overseas instead of paying federal income tax on those profits from now until eternity?
These are important questions that face America. Yet these tax breaks are not what we hear about in the media. We hear about saving 40 billion dollars over 10 years by decreasing the SNAP (food stamp) program. Forty billion dollars is a drop in the bucket compared to the tax breaks corporations get each year. Clearly, based on how they have voted many members Congress are willing to let our children, disabled, seniors, veterans and working poor go hungry and without health care. Every time a person listens to a media program, leaders of the Congress talk about the “drain on our economy” from funding food stamps, The Affordable Care Act, Medicare, Social Security, infrastructure repair, education, Head Start or a jobs bill. Of course it should be noted that the “drain on our economy” that they champion, do not relate to any of the tax breaks or tax incentives they protect at any cost, and result in “big bucks” for their campaigns or PACS. Tax breaks like beauty are determined by “the eye of the beholder.” So the question becomes for each and every person in the United States: “Do You Choose Life (The Affordable Care Act) or Money? Money for corporations, for moving jobs overseas, for protecting retirement costs for the most wealthy, lower taxes on investment income, for including “RV’s and Yachts under the Home Mortgage deduction and so many other tax breaks that are directed to the wealthy and corporations, or do you choose tax breaks that improve a person’s health so that perhaps they will be around to enjoy retirement? We stand at precipice of a fork in the road for America. What will America choose? What will YOU choose? Will you choose life across the age spectrum or will you choose money? The choice is yours.
About the Authors: By: Barbara J. Cobuzzi, MBA, CPC, CPC-H, CPC-P, CPC-I, CENTC, CPCO and Lynne Smith, MSSW. Barbara is an industrial engineer with an MBA. She worked in the pharmaceutical industry for many years before moving into the healthcare industry where she had a company where she provided top quality coding, compliance and revenue cycle management services for physicians. She has since moved into full time consulting for physicians. Barbara is a nationally known expert known for her education, consulting and expert witness services. Lynne has dedicated her career to helping others. She has experience as a social worker in a rural county, an administrator in a large hospital network and as a College Professor. She uses the skills she developed over the years as an advocate in a variety of areas including her most recent venture serving as a Healthcare Advocate. Together, Lynne and Barbara own the ACA Healthcare Advocates consulting firm and are available to individuals, families and businesses to help them meet the requirements of the Affordable Care Act in order to meet the specific needs of the client while optimizing the fiscal considerations. Please direct your questions and/or inquiries to firstname.lastname@example.org.