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Value-added tax: Could it cover the health care reform bill? MedCity morning read, May 28, 2009

7:00 am by | 1 Comments

Health care reform photo illustrationTaxes on the rich. New taxes on businesses. Taxes on sugar-laden cereals, tobacco and alcoholic beverages — all have been floated as potential ways to pay for the nation’s health care reform.

How about a value-added tax? proposed the Wall Street Journal Health blog.

With Pres. Barack Obama talking about a trillion-dollar-plus expansion of health coverage, the value-added tax — a kind of national sales tax — has been making new friends in Washington, according to the Washington Post.

Common around the world, including in Europe, a value-added tax has been taboo in the United States. But advocates say few other options could raise enough money to enable the nation to sidestep financial calamity in the name of health care reform, the Post said.

A VAT is a tax on the transfer of goods and services that ultimately is paid by the consumer, according to the Post. It would increase the cost of just about everything, from a carton of eggs to a visit with a lawyer. It also is highly regressive. That is, it would fall largely on the poor.

But Dr. Ezekiel Emanuel, who is a White House health care advisor, said in his 2008 book “Healthcare, Guaranteed,” that a 10 percent VAT could pay for every American not entitled to Medicare or Medicaid to enroll in a health plan with no deductibles and minimal copayments, according to the WSJ Health blog.

During a White house conference earlier this year on government budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy Geithner to consider a VAT, the Washington newspaper said.

“I think a VAT and a high-end income tax have got to be on the table,” Sen. Kent Conrad, the North Dakota Democrat, told the Post during an interview.

More stories worth a read:

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Mary Vanac

By Mary Vanac

Mary Vanac is a co-founder of MedCity News.
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