Colorado Proposition 69

Politics & Elections
1

No not what you think.
This proposition would make Colorado into a single-payer health-care system and exempt Coloradans from Obamacare. Surprisingly it faces an uphill battle because it is being touted as more taxes despite the fact that for most Coloradans the increase in taxes would be less than what they currently pay in premiums let alone copays and deductables. For example, a household making $50,000 a year will pay $1665 for coverage. Oh well, no one ever loss money betting on either the stupidity or innumeracy of Americans and here you have both.

According to NPR, the pro-69 groups are thinking of bringing Bernie Sanders out here to promote the proposition. No word yet from his staff.

2

I live in Colorado.

Your numbers are wrong. Proposition 69 proposes a flat, 10% tax on all income, with essentially no exemptions except for some portion of retirement income. The cost to your hypothetical household making $50,000 / year would be $5,000.

Sold your house and made a $200,000 profit? Cough up $20,000.

Inherited $300,000 from a relative? $30,000 to the state.

Self-employed and making $150,000 / year? Your cost is $15,000.

They try to hide this fact by structuring the 10% increase as a 3.33% payroll tax increase “paid by employees”, and a 6.67% increase “paid by the employer”. Aside from the fact that many people are self-employed and/or get substantial income from non-payroll sources, and thus will be directly responsible for the entire 10% increase, it is also ludicrous and misleading to pretend that businesses will just absorb this cost, especially for higher-paying jobs for which it likely exceeds what the business is currently paying to offer health insurance.

This will make it very uneconomical to operate businesses in Colorado that provide well-paying jobs, and it will drive away talented young people who do not presently spend anything close to 10% of their income on healthcare.

I do believe there is a cap on the maximum income subject to the tax, but it is ludicrously high, something like $450,000 / year.

Personally, I am an independent contractor, and my income has ranged from $50,000 to $170,000 over the past few years. I spend only $3,600 / year on health insurance and rarely use any health services. I also don’t expect to live in Colorado for the rest of my life. If this passes, it will be absolute bullshit for me to have to pay an extra $17,000 into a socialized medicine program that I likely will never even benefit from, and I’ll probably leave the state.

The exodus of talented, highly-paid professionals will tank the economy and the entire program will become insolvent once they run out of productive taxpayers to foot the bill.

3

Even the proponents of 69 admit that it will cost $25 billion a year in new taxes. And yet you’re surprised that it faces an uphill battle???

For comparison, the total state budget for next year is $27 billion.

4

So according to your example, the employee has to pay the employer part of the tax too? Not true. A household making $50,000 of payroll income will pay only $1650 of the tax. And no one has tried to hide the total is 10%.

Do you have any numbers to back this up? What percent of Coloradans receive “significant” income from non-payroll sources? For households making under $100,000 what’s that average amount of that from non-income sources.

Companies absorb payroll taxes all of the time. FICA, FUTA and state unemployment. You also neglect the fact that in Colorado, the employer pays no state disability tax.

Again the employee part is 3.33% and not 10%. Claiming that employees pay 10% of their income is simply not true. And after Obamacare, how many people spend more than 3.33% of their income on ALL medical expenses including copays and paying off deductables?

I think your entire argument is summed up in this paragraph. YOU have to pay the full 10% and you don’t want to have to pay for everyone else.

5

I’m not surprised. The point I’m trying to make is that people are not considering that paying $25 billion in new taxes is offset by not having to pay health care costs. Not only the premiums which can be substantial but also payment for services. Things like the $40 in copays I paid this month for my son or the $1200 we had to pay for an unneeded sleep test for Mrs. Cad or the money we pay every month for her medication. Opponents of Prop 69 are implying it is $25B in taxes above what we already pay in healthcare costs. In actuality Coloradans as a whole could SAVE up to $6B in healthcare costs under the plan.

6

This seems like a valid position to take. “Because of my job situation, I would have to pay the full 10% myself, and I don’t want to. Therefore, I am voting no”

7

On the other hand, people will not be paying insurance premiums. I get the impression that people think that they’re going to pay higher taxes for their health coverage (which they will) and still have their insurance premiums deducted from their pay checks (which they won’t). Higher taxes do not necessarily mean less money in your pay check.

But changing to a flat tax – for any reason – is a bad idea.

8

Absolutely. But two things about it:

  1. Don’t mischaracterize the proposition saying EVERYONE will be paying the full 10%.
  2. I don’t know Absolute’s situation so I’d be curious to know if he ever got any subsidy from a state or feds paid by taxpayers like a scholarship or Pell grant to a state college, benefits for his business, if his social security benefits will be more than he paid in, etc. If he truly has never received any subsidy from a government agency then at least hes consistent that everyone should pay their own way.
9

Good point.

I don’t believe that just because someone may have received a benefit from the government at some point means they HAVE to support ANY program that provides a benefit.

10

Do you have any numbers on that? Istm, people with above average incomes will definitely feel a hit on this.

Looking at the ballotpedia page on this, it mentions that they will “establish a purchasing authority for pharmaceuticals and medical equipment;” While having a single buyer is a good way to keep costs down, how is this going to work with private hospitals?

11

Over recent years, Coloradans have spent about $36M per year on health care costs so I believe the numbers are based of a savings of $11M minus cost of administration. As for high income people taking the hit there is no doubt about that. Yes this is a socialized health care system but what is the alternative? Most poor and middle class people have health insurance where they pay premiums that can be excessive and then have medical costs on top of that. If I were to have family coverage on my work’s insurance my premiums alone would be over $8000 per year on an income of under $70,000. Hell if I paid the full 10% I’d still come out ahead. Plus that doesn’t include the $40 I paid in copays because Kaiser decided that looking at my son’s knee and looking at his toe needed two office visits. That doesn’t include drugs or paying off the deductable or anything.

And in the interest of full disclosure, because of the wife’s insurance and mine and the way the numbers break down, we pay about $3600 to have all 3 of us covered. Based on our household income we would pay about $5000 in extra taxes if Prop 69 passes but you know what we are still voting yes because it is better than the current system.

12

What happened, Colorado? You used to be cool, with the dope and shit. :wink:

13

The idea that people do not have to pay the full 10% because 6.67% of it is the responsibility of their employer is a fiction. Employers do not have bottomless buckets of free money and many will react by reducing their benefits in some other way. Assigning the cost to the employer does not make it go away, it merely provides a way to try to falsely tell voters they will not have to pay it. You did this in your OP when you stated the cost to a family making $50,000 was merely $1,665. You pretended that the family’s employer(s) will simply absorb the remaining $3,400 tax increase without complaint, which is an unsupportable assumption. The fact that employers currently pay and do not pay all sorts of other taxes doesn’t change that they will suddenly be paying 6.67% more than whatever they’re paying now.

Certainly, if you have an employer who is already paying for your health insurance, this may not actually be much of an increase. But, it will provide a disincentive for any further pay increases, and wage growth is already too slow by many measures. And note that employers with less than 50 employees are not required to provide health insurance anyway, and most do not. In this case, the 6.67% tax is basically a state-mandated raise, and they may have to curtail other benefits or even cut wages if their budget does not permit giving every employee an immediate raise by the command of the voters.

Another consequence of this proposition, if enacted, is that Colorado will be swarmed by low-income people who are seeking free healthcare, since (unlike an independent nation which can control its immigration policy) the state has no way of keeping people out or admitting only people who can contribute economically. We have already collected a bunch of losers who only showed up for the legal pot, who are driving up the cost of low-income housing in the Denver area, we don’t need to make things even worse.

So, to summarize, the law will drive away young, talented, high-income residents from Colorado and attract older ones with health problems and low incomes. Sounds fantastic.

I don’t believe I have ever received any such benefit, other than various tax credits offered for one thing or another, but regardless, there is a difference between grants, scholarships, loans, awards, etc. provided by the government in order to promote specific policy goals (e.g. scientific research, small business growth, etc.) and blanket entitlements that are awarded to every citizen merely for their continued ability to breath oxygen.

14

Oh my word. You’re the proverbial young healthy person who doesn’t use health insurance–the reason the individual mandate was passed!

OK, whatever, dude.

This sounds like progress, flat tax or no. And I love that Colorado is using a *perfectly innocuous *name like “Proposition 69” for it.

15

With the exception of those who are within 6-7% or so of the minimum wage, since the 6% won’t be counted against their minimum wage.

16

In addition, it may be true that increasing taxes on the wealthy would drive them out because they can get a better deal elsewhere (similar to how football owners can move to another city that offers them a free stadium and tax breaks.) But if you count payroll taxes against the employee, then employees are very heavily taxed compared to pure capitalists (i.e. people who make most of their money on capital gains.) Not only do you count the 14% total payroll taxes, you should also count, in my opinion, the several percentage in unemployment tax and worker’s comp insurance that falls heavily percentagewise on wage earners, not to mention a couple percentage of income tax for those making more than the minimum wage*. Then if you add 10% health tax on top of this, low wage earners would be paying almost 30% of their income in taxes.

*Plus maybe a few hundred, up to around a thousand in car fees and the extra they are paying for auto and health insurance because premiums are higher because they are mandatory, but I’m not sure whether to count that or not.

17

Forgot another one. Assuming that Colorado has a homestead exemption for homeowners, the poor are also paying for their apartment’s property taxes because their landlord doesn’t benefit from the homestead exemption that benefits the middle class and upward.

18

For the majority of employers and employees, isn’t the cost difference minor? Like an employee earning 50k means about 3300 paid by employer, 1700 by employees. Is that roughly what they’d spend anyway for health care? For the majority of people, the difference isn’t that big.

The well off and those with a lot of non payroll income will take a hit. I agree. But overall this system will be cheaper and more humane.

19

I’m on the fence with how to vote. 69 would be a huge tax increase for me and wouldn’t really give me much for it. Before the oil crash I made over 350k and had a gold plan that cost my family of 3 $680 per month or about 2% of my income I was self employed so this would represent an 8% tax increase which is nuts. Even if I was working for one of my old employers this would be a tax increase.

I’m also not certain what negotiating ability the state of Colorado will have since they don’t represent a large population state. There is also the problem of people moving in for the free health care who will typically be poor and sick so the system will cost more then expected.

Of course I’m also biased because due to the oil crash I’ve been on Medicade since the start of 16 and aside from a couple of stupid things it’s been a great program and has been incredibly cheep with $1 prescription co-pays and excellent since I was able to keep my doctor. Medicade in Colorado covers you up to $53k per year for a family of 3 so your hypothetical person making 50 would see a huge tax increase since health care is currently basically free. Having been both poor and rich I’m pretty happy with the current system.

All that being said I’m moving to California today so I won’t get to vote for 69 and my taxes are going up 4% regardless.

20

And like I pointed out before, don’t necessarily count the tax increase against premiums but against all health care costs. Even with insurance, copays, meds and deductables can make getting sick very expensive.