Should the Rich Pay for Healthcare?

Should the rich pay for everyone's healthcare?

Featured November 09 Words by Ian Wylie And Rosie Carr
Should the Rich Pay for Healthcare?


Says Ian Wylie

I'm a big fan of taxes - so long as someone else is paying them. And when it comes to financing all those latex gloves used by surgeons, I'm all in favour of the überwealthy paying more than their fair share.

Funding healthcare is a blinding migraine for most governments, at least for those that care about their citizens' wellbeing. In the US, the only industrialised country not to offer some kind of universal healthcare (some 70 million Americans are not covered adequately), politicians have spent much of this year in a lather over proposals to extend health insurance to all by charging a surtax on the country's wealthiest 1%.

But here in Europe, where we've got used to the concept of universal healthcare, we too may have to consider similar measures as populations age and medical costs spiral. It is estimated that by 2050 there will be only two working-age citizens for each elderly person in the EU (currently there are four). That's just two people earning money to pay for my prospective bed bath, Zimmer frame and stairlift.

So what's so wrong with a Robin Hood principle of taking more from those with a lot in order to protect those without? When the World Health Organization looked last year at the pattern of healthcare around the world, it found that people with the most means - the wealthy whose needs for healthcare are often less - actually consume the most care. And those with the least means and greatest health problems consume the least. Public spending on health services most often benefits the rich more than the poor in high and lowincome countries alike.

An extra tax on the rich to help meet rising costs would be relatively easy to administer and regarded by most as a fair solution to a difficult problem. Those opposed to higher taxes will whine predictably that we shouldn't penalise the wealthy, after all, they're the shining knights who invest, recruit and keep our economies going.

But there's little evidence to suggest that reaching into the deep pockets of the richest 1% for a tiny contribution would reduce their economic libido. In the US, the wealthiest 1% of households take home around 20% of the country's total income. There's plenty to spare. Besides, if taxing the hyper-wealthy guarantees healthcare for a larger number of people, who will then be able to remain healthy and economically active, the positive effect on the economy is likely to be far greater.

Surely if health is a human right and not a privilege, those who sit at the top of our economies could afford a tax increase of a percentage point in order to save the system for everybody. If it means that by taking a bath a few fat cats stop everyone else from drowning.

Ian Wylie writes for The Financial Times and the Guardian

Says Rosie Carr

No one likes a sponger. You know the type: the friend who takes advantage of other people's generosity. They love to wine and dine but always leave before the bill arrives. Some of us tolerate paying their way better than others, but spongers are never going to win a popularity contest.

For some reason, though, when it comes to the rich, sponging is OK. The not-sorich seem to think it's only fair the former should be made to pay for everything. Is a whole healthcare system too much to ask?

It's easy to believe the rich are a horrible lot: greedy and mean, not to mention clever tax dodgers. But those claims are as true as saying the poor are all lazy and stupid.

Rich people pay tax like everyone else and the more they earn, the more they contribute. There is plenty of research showing the rich are the biggest contributors to government coffers. One study has shown that the top 1% of earners pay more in income tax than the bottom 90%, and that the top 25% of earners who took in just over 67% of a nation's income paid 86% of the income tax collected.

Having paid their taxes, why should the rich alone then be asked to shoulder the burden of something like a healthcare system? Why stop there? Why not demand they pay for computers for everyone (although if that happens, can I have one please)?

The chief reason why the rich shouldn't be made to pay is that an extra tax levy would simply take away any incentive they currently have for working hard and not sponging. What's the point of putting in extra hours and taking risks with your own money if further down the road the state is going to mug you for the rewards?

In fact, this incentive issue is crucial. By taxing success, you remove an incentive for people to become successful. Even worse, you remove any incentive for other groups to try harder to improve their situation. Why bother? Someone else is paying your way through life so there's no need for you to do so. The evidence to back up these assertions lies in the millions of healthy, intelligent people living off welfare.

So, targeting the rich with an extra tax could backfire dangerously. But that's not the only problem. Such a tax would also be unfair. If we abandon the principle that we all pay the same flat-rate tax on the same bands of income, then any single group of individuals, for example, successful musicians, women, parents, smokers and drinkers, could be targeted for "extra tax".

Governments will exploit the precedent to pit group against group in their battle to make us hand over ever more preposterous amounts of our income.

If a country can't afford a healthcare system, then spending should be cut or tax rates raised for everyone, not just its hardest-working citizens.

Rosie Carr is deputy editor of Investors Chronicle magazine

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