Tag Archives: political economy

Death Panels?

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The Affordable Care Act required Medicare to penalize hospitals with high numbers of heart failure patients who returned for treatment shortly after discharge. New research shows that penalty was associated with fewer readmissions, but also higher rates of death among that patient group.

Because sometimes readmission is necessary for quality care—whether that readmission was driven by later complications, by too-soon original discharge in the Medicare (which is to say Government) pressure to hold down costs first, or by some other factor—but that Government pressure to push the patient out the door also pushes against the patient’s return.  Even when necessary.

Here are a couple of numbers from a study soon to be published in JAMA Cardiology:

One in five heart failure patients returned to the hospital within 30 days before the ACA passed. That dropped to 18.4% after the penalties. Mortality rates increased from 7.2% before the ACA to 8.6% after the penalties….

In other words, an 8% drop in readmissions is associated with a 19% rise in death rates for heart patients.  That’s not a favorable trade-off.

There is a legitimate interest in improving the quality of care for all patients, including those for whose care us taxpayers are paying, but readmission rate is not an accurate measure of that quality.  Readmission rate can only measure…readmission rate.  That metric addresses neither the reasons for readmission nor the reasons for the prior discharge.

Government pressure to hold down readmissions doesn’t quite amount to death panels, but the outcomes seem dismayingly similar.  To be clear, the results of the study do not establish a causal relationship, for heart patients, between the lowered readmission rate and the higher death rate.  However, the magnitude of the apparent association between the two desperately wants further investigation.

Tax Havens

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Christian Reierman, writing for Spiegel Online, thinks tax havens are bad.

He began with the usual false premise, itself as usual unspoken: that Government is owed the money earned by private citizens or their privately owned enterprises, or that Government is somehow otherwise entitled to it.  His proximate vehicle is the Paradise Papers and their exposure of how widespread is the use of tax havens—entirely legal tax havens, mind you—by international businesses.

The German newspaper Süddeutsche Zeitung leaked a vasty number of documents—the so-called Paradise Papers—that exposed

how the rich and super-rich, international stars and companies try to avoid paying taxes in their home countries. It is a game for the wealthy.

The horror—people with money try to protect their wealth from grasping governments.  This time, they’re trying to protect the gains of the businesses they run:

The players are usually multinational corporations seeking to shrink their tax bill using convoluted structures. Tech-giant Apple once again stands accused of skullduggery, as does sporting-goods producer Nike. The accomplices are also largely the same. The deals in question invariably involve tax havens such as the Bermuda Islands, British dependencies such as the Isle of Man or Jersey, and European member states like the Netherlands, Luxembourg and Ireland.

Notice that: nothing here is illegal.  No skullduggery is present.  These business owners just are supposed to voluntarily give up what governments demand, simply because governments demand it on that false theory that the businesses’ prosperity belongs first to Government.

Here’s the game given away; here’s Reierman’s telltale question:

[W]hy are EU member states still allowed to cheat their partners within the bloc out of tax revenues?

There’s no cheating going on, of course.  It isn’t Government’s money.  And there’s nothing wrong with nations competing with each other for businesses and the employment that businesses bring–including competing on tax rates.  Full stop.

As always, the right answer is not to hold back the rich, to punish the successful with high taxes, or to cap the ability of individuals to be successful by restricting them to the performance of the weaker.  The right answer is to lower taxes all around and thereby leave more money in the pockets of the earners—including the poor.  The right answer also includes restricting government spending, which crowds out private spending by artificially increasing overall demand; which increases prices with its non-economic, inflated demand; which devalues the money left in the hands of the earner—particularly harming the poor.

The right answer begins with the clear recognition and admission of whose money is involved here.

So, What’s the Problem?

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Don Peebles, Peebles Corp CEO, is worried about the Senate and House tax reform plans currently on offer.

…the GOP tax bill will have a catastrophic impact on New York City, leading to a mass exodus of business owners and entrepreneurs.

And

State income deductions and the local pressure on taxes that [Mayor Bill de Blasio] is calling for, an increase in taxes on millionaires and a mansion tax increase. I think that’s also going to be hard on real estate[.]

And

Peebles said the financial capital of the world is becoming more of an anti-business environment with high taxes and a diminishing quality of life, forcing entrepreneurs and businesses to seek opportunities in other states.

“No deductibility of state income taxes and New York is one of the top three highest-taxed states in the country, and then when you add the New York City tax implications on it, it can be as high as 17%. I think it’s a pill that people are going to have difficulty swallowing[.]”
…
“We have to impose some discipline on state and local governments, and I think responsible governors and mayors will do that,” Peebles said.

Indeed.  Instead of whining about a national-level tax plan that’s good for the nation as a whole, maybe folks in these usurious tax States, including their Senators and Representatives in Congress—especially them if they’re responsible—ought to spend a measure of that energy on working to get their State and local taxes lowered.

If businesses can’t function in a tax jurisdiction without subsidies for those taxes, they should leave; they owe it to their owners and customers, and they have no obligation to stay.

The Tax Proposals on Offer

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The House has one, and the Senate has one.  The Wall Street Journal, oddly, is making out like the differences between the two are enormous.  Yet, here’s the WSJ‘s own chart illustrating these humongous differences.

The big differences the WSJ singles out are these:

The big ways the Senate version breaks with the House plan: the level of top individual tax rates, the number of individual tax brackets, the timing of a corporate tax-rate cut and the particulars of estate tax changes[.]

How big are these differences, really?  The top level doesn’t even differ by a per centage point, and the number of brackets only differ in how finely income should be subdivided.  The timing of the corporate tax-rate is a matter of a year, again a small difference: put it in place in 6 months, rather than immediately; cut the rate to 27% this year and 20% next; and on and on—even trading this year vs next for something else.  Estate tax changes differ only in repeal or not—in 6 years, a lifetime in politics, a complete Senate election cycle.

Even the differences the paper elides, keeping or eliminating deductions for SALT, medical expenses, and student loan interest, is tiny.  Most folks don’t itemize, which is the only place these deductions even exist, and with the standard deduction doubled all around (personally, rather than a single/married standard deduction, I’d rather see the standard deduction keyed to the then-current year Federal Poverty Guideline, but that’s a trivial difference at present, too) and lowered personal income tax rates, the value of those deductions shrinks even further, especially for those who still would itemize.

No, the two versions blatantly, firmly, agree on the principles and the degree to which those principles should be satisfied in the tax reform effort underway.  They differ on numbers and timing—all small things that are easily resolved, except to the extent the Republican Snowflake Three in the Senate get in the way and to the extent the My Way of the Highway collection of House members let their egos get in the way.

It’s Not Your Money—It’s Ours!

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That’s the attitude of the European Union political elite—especially the ones in charge.  In truth, the attitude isn’t unique to them; we have a similar problem, no less damaging to our economy and individual prosperity.

Documents cited by German newspaper Süddeutsche Zeitung on Monday suggested that offshore law firm Appleby, which is based in multiple tax havens, helped the iPhone maker [Apple, Inc] move billions of dollars in revenues collected in Ireland to the Channel Islands to head off increased European Union scrutiny of its tax affairs in Dublin.

This isn’t tax avoidance, though, this is just a legitimate attempt by a business to keep what it’s earned.

On the contrary, “Just quit arguing, and give us your income,” says the EU; “We’ll take what we think is appropriate, and we’ll leave you with what we think you need.”

The money grab effort doesn’t get any more blatant than this recommendation by Gabriel Zucman, an Assistant Professor of Economics at UC Berkeley, beginning with his insistence on taxing more, not less:

The incentives to shift profits out of Germany are high, because the corporate tax rate is relatively high – around 30% when you take municipal taxes into account.

But this does not imply that Germany should cut its rate. Instead, it should tax multinational companies differently….

Because some companies are more equal than others.  So, how differently?

[B]y apportioning…global profits proportionally to where they make their sales. So if Apple makes $100 billion in profits globally and 10% of its sales are made in Germany, 10% of its global profits would be taxable in Germany.

Gimme, gimme, gimme.