Thursday, December 24, 2009

Is A tax Revolt Forthcoming?

I wonder what would happen, if all taxpayers file their own tax returns reporting all income as usual but include a new or additional form. This form would be a Schedule C showing business income or loss. However, the net would be a loss sufficently large enough to bring taxable income to ZERO! One might call his new company “Geitner Insolvency Group” Business Code 523900, He might be tempted to  show income of Zero but deduct as taxes all taxes he paid or had withheld for the year. Then he might deduct as a Bad Debt all Social Security taxes he had paid in since he started working as an other deduction. (At the rate the socialist are going anyone under 55 mostlikely will never collect what was taken from them) I as a tax professional would never suggest this tactic to any of my clients , but I see how anyone who files their own tax return using the free e-file tax section of WWW.IRS.Gov might be tempted to do in that way. If one was so brazen as to try this they might also be smart enough to deposit those funds in a special account and have ready to access if feds storm in!>

The Change That Destroyed America

In four years from now, the Healthcare legislation that was passed by our legislators was  like a patient getting a flue shot for H1N1 and pleased that he didn't become ill. However in 2013 he discovers that the shot was laced with the Ebola virus that gave him a cruel and agonizing death. The patient however was the USA whose electorate bought into an idiotic message of change.

The Only Way to have a Just Public Option

If indeed this country can not deliver a good health system without involvement of insurance let’s broaden the options to include not only private insurance companies and the so called public option but a private option as well. This private option would be self insurance or funded Health Savings Accounts (HSA) that could buy high deductible Catastrophe Insurance with tax treatment compared to the so called Cadillac plans. This feature should soften the objection of the libertarians who opposed mandated purchase. Low income people who elect to have the private option could be granted health stamps to fund their HSA’s.

Then, continue the states authority to monitor all health insurance sold or issued in their respective jurisdictions. Continue the states obligation to see that all insurance companies issue policies that have a fair and adequate premium (this will include any public option) as well as have the financial strengths to pay all current and future claims arising out of current claims and newly discovered catastrophic conditions. This would also apply to any federal plans or their sponsored co-ops or other schemes. The states already through their respective insurance departments have the infrastructure necessary to regulate this system thus the time frame could be moved up to 2011 the same year when all new taxes and fees begin.

Individual risk that our deemed to be so adverse that no premium is adequate could be pooled and assigned to carriers. The assignment similar to auto assigned risk would be based upon each insurer’s prior three year average premium written in the particular state and further factored based upon the quintiles of profitability. These quintiles would be assigned a number of zero through four with zero the least profitable to four the most profitable. To determine profitability 100% minus the loss ratio (claims incurred divided by premiums earned) minus .12 for overhead(12% of premium maximum standard for all) would equal percent of earnings of 3%. Note, income taxes would not enter into the profitability equations as all health Insurance carriers should be exempt from income tax just as the public option schemes would be. The 12% allowance for administrative cost should be adequate to cover reasonable expenses and motivate efficiencies and innovation. The loss ratios which state insurance examiners will verify every three years will hold steady at 85%+/- if the growth in utilization and hypochondrias holds at current rate which is highly unlikely. In the event that this country’s health care cost as a percent of the Gross National Product does not decrease by two percent by the tenth year of this law then all health insurance programs (including Medicare) except HSA’s should be terminated and a direct repayment of Medicare tax to all wage earners who have paid into the Medicare trust fund.