Fast-forward to the dawn of the Obamacare utopia. In one of a bazillion little clauses in a 2,000-page bill your legislators didn't bother reading (because, as Rep. John Conyers explained, he wouldn't understand it even if he did), Congress voted to subject the 28 percent tax benefit to the regular good ol' American-as-apple-pie corporate tax rate of 35 percent. For the purposes of comparison, Sweden's corporate tax rate is 26.3 percent, and Ireland's is 12.5 percent. But just because America already has the highest corporate tax in the Organization for Economic Co-operation and Development is no reason why we can't keep going until it's double Sweden's and quadruple Ireland's. I refer you to the decision last year by the donut chain Tim Hortons, a Delaware corporation, to reorganize itself as a Canadian corporation "in order to take advantage of Canadian tax rates." Hold that thought: "in order to take advantage of Canadian tax rates" - a phrase hitherto unknown to American English outside the most fantastical futuristic science fiction.
Ask yourself this: If you impose a sudden 35 percent tax on something, are you likely to get as much of it? Go on, take a wild guess. On the day President Obama signed Obamacare into law, Verizon sent an e-mail to all its employees warning that the company's costs "will increase in the short term." And in the medium term? Well, U.S. corporations that are able to do so will get out of their prescription drug plans and toss their retirees onto the Medicare pile. So far, just three companies - John Deere & Co., Caterpillar and Valero Energy Corp. - have calculated that the loss of the deduction will add a combined $265 million to their costs. An additional 3,500 businesses presently claim the break. The cost to taxpayers of that 28 percent benefit is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person. So we're roughly doubling the cost of covering an estimated 5 million retirees.
This single component of "health" "care" "reform" neatly encompasses all the broader trends about where we're headed - not just in terms of increased costs and worse care, but also in the remorseless governmentalization of American life and the disincentivization of the private sector. As we see, even the very modest attempts made by Congress to constrain the 2003 prescription drug plan prove unable to prevent its expansion and metastasization. The one thing that can be said for certain is that, whatever claims are made for Obamacare, it will lead to more people depending on government for their health arrangements. Those 5 million retirees are only the advance guard. And, if you're one of those optimistic souls whose confidence in the Congressional Budget Office (CBO) is unbounded, let's meet up in three years' time and see who was correct - the bureaucrats passing out the federal happy juice or the real businesses already making real business decisions about Obamacare.
Can we afford this? No. Even on the official numbers, we're projected to add to the existing $8 trillion in debt another $12 trillion over the next decade. What could we do? Tax those big, bad corporations a bit more? Medtronic has just announced that the new Obamacare taxes on its products could force it to lay off 1,000 workers. What do those guys do? Well, they develop products such as the recently approved pacemaker that's safe for MRI scans and the InterStim bladder-control device. So that's 1,000 fewer people who'll be working on new stuff. Well, so what? The public won't miss what it never knew it had. So again, the effect is one of disincentivization - in this case, of innovation.
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