Senator Peter Galbraith, D-Windham, is sponsoring a bill (S.252) that attempts to outline possible funding for Gov. Shumlin's ill-conceived single payer health care system. Shumlin has to come up with $2 billion in taxes, by 2017, to pay for his grandiose program. It's an election year so, even though he has a legal obligation to present a plan, he has been unwilling to share any of his thoughts on the matter.
But Galbraith recognizes that single-payer has the potential to wipe out the state's business community. So he is taking the lead on a funding plan.
In comments he posted on VTDigger.org, Galbraith writes:
"There are four taxes -- and only four taxes -- that can raise $2 billion. These are: (1) a payroll tax; (2) the income tax; (3) the sales tax; and (4) a capitation tax, or mandatory premium.
- Using just the payroll tax we would need a rate of 17%.
- If we used just the income tax, we would have to start the tax with a 33% bracket and a top rate of 39%.
- If we used just the sales tax, we would have to expand the tax to cover food and clothing, and we would need to set the overall rate at 29%.
- If we used just [mandatory] premiums, every Vermonter not excluded from Green Mountain Care (i.e., Federal employees) will have to pay an annual premium of $5,200.
- If $500 million were raised from each source, it would require a payroll tax of 4.25%, a [mandated per-person] premium of $1,325), a 7.5% increase in the marginal rates in the income tax and a sales tax of 11.75%."
Of the numbers, Galbraith points out "If we just use the payroll tax we will add 17% to the bottom line of the many Vermont businesses that do not now offer health care. We will alienate our largest employers, who are self-insured and who would see their costs rise as their employees get the superior Green Mountain Care benefits. If we hike the income tax by adding 30% to each tax bracket, we will alienate almost everyone. We will certainly alienate the state's highest earners who could face a combined state and federal tax rate of 78%."
Galbraith concludes "I see no sign that the Administration or the legislature is prepared to support tax hikes of the kind I have outlined. The Administration declined to present the plan required by Act 48 in January 2013 and more recently the Governor declined to share his administration's ideas with the legislature, although he had said he would do so."
"We should end the uncertainty that is undermining our economy. Let us be honest with our constituents. If we are not willing to raise $2 billion -- if we are not ready for a payroll tax, for a doubling of the income tax, for a doubling of the sales tax and for a premium tax -- let's just say so."