Graham-Cassidy-Heller-Johnson Proposal

Comments for the Record

United States Senate

Committee on Finance

Hearing to Consider the Graham-Cassidy-Heller-Johnson Proposal

Monday, September 25, 2017, 10:00 A.M.

By Michael G. Bindner

Center for Fiscal Equity

Chairman Hatch and Ranking Member Wyden, thank you for the opportunity to submit these comments for the record to the Committee on Finance. 

We write in strong opposition to the bill as presented. It combines the worst features of the House-passed bill, the bills recently rejected by the Senate and the kind of state by state deals designed to add objecting Senators to the bill’s supporters that were so roundly criticized when health care reform was initially passed. Because the balance is now so delicate and bipartisanship impossible given recent remarks by certain members and the Speaker of the House, any hint of bicameralism is gone, just like when the Affordable Care Act was passed. The majority has become what it most despised about passing Obamacare.

The news is not all bad, of course. There is a way to end the high unearned-income surtax, roll back pre-existing condition reforms and transform Medicaid so that it is not an onerous future obligation to the States, but without actually killing lower income Americans or at least forcing hospitals to care for them in the most expensive manner and billing them int0 bankruptcy (which you cannot end because it is in the Constitution).

This method was initially proposed by President Obama but rejected in his own party, oddly to pick up conservative Democratic votes in the Senate (which did not ultimately help their reelections). That method is a subsidized Public Option. It could include all with pre-existing conditions or the inability to pay even the most basic insurance (while ending the ability to write garbage policies that will never pay off). All other Medicaid for Seniors, the Disabled and those in long-term care could be federalized in exchange for ending the state and local tax deduction (SALT) as part of tax reform. Indeed, this whole process could be married into tax reform in such a way as to help that reform pass bipartisanly.

We are sure that by now the Committee is well aware of our four-part tax reform proposal. Only one element applies to subsidizing the public option and replacing the high unearned income surtaxes, our proposed Net Business Receipts Tax.

The NBRT  is essentially a subtraction VAT with additional tax expenditures for family support,  health care and the private delivery of governmental services, to fund entitlement spending and replace income tax filing for most people (including people who file without paying), the corporate income tax, business tax filing through individual income taxes and the employer contribution to OASI, all payroll taxes for hospital insurance, disability insurance, unemployment insurance and survivors under age 60.

Unlike a VAT, an NBRT would not be visible on receipts and should not be zero rated at the border – nor should it be applied to imports. While both collect from consumers, the unit of analysis for the NBRT should be the business rather than the transaction. As such, its application should be universal – covering both public companies who currently file business income taxes and private companies who currently file their business expenses on individual returns.

Employees would all be covered and participants in government funded remedial education programs would receive coverage and tax credits through the training providers health plan as if they were employees. There will be no more separate Medicaid programs for the poor who are able to learn or work. Those wh0 cannot will be covered by the public option.

Thank you for the opportunity to address the committee.  We are, of course, available for direct testimony or to answer questions by members and staff.