Time to tax hospitals?

With the new passage of our national health insurance reform, everyone will be covered by 2014. At least that’s what we’re being told. This takes away the excuse hospitals have used to avoid paying property taxes like every other business-which has been that they have been providing services to the indigent.

It was a line of bull to begin with- because those costs were just passed along to those who paid insurance, or by charging much higher rates to those without insurance. If you need to read about how this happened- read this post: “How much do 3 stitches cost?”

Besides, when hospitals and insurance companies can afford to pay their executives millions of dollars per year, someone is profiting greatly. Not exactly the same as a non-profit that struggles to finance operations that are dedicated to helping the less fortunate. Trust me- these CEOs aren’t struggling at all.

The reality is- we’ve been subsidizing this industry for too long- and now, are putting laws into place to actually get something back from our investments. Now that the playing field is getting leveled- and everyone will be getting services for the same price, it’s time for hospitals to contribute to the communities that support them just like everyone else. They depend on good roads, fire departments, police, good leadership, an educated workforce, so why not pay for it? Besides, looking over campaign finance reports for the last 20 years- you can see the leadership of hospitals have no problems giving large sums to political candidates.

With schools suffering every time a piece of property is acquired by a hospital, their rampant expansion has hurt schools throughout the State. It’s time to realign our taxation strategy.

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24 Responses

  1. Robert Vigh March 25, 2010 / 12:13 pm
    So……taxing hospitals = no increase in price to consumers & CEO’s covering the difference……

    or…

    Taxing hospitals = increase in prices and no change to the CEO’s salaries?

    So, in an effort to build up public schools……..you want to tax hospitals which raise prices on the sick which transitions a larger tax burden to sick people? Short form……..You want sick people to pay for schools?

    Just a thought. I dont like giving businesses subsidy, but lets admit it, the healthcare system is a mire of government crap that already increases prices. So, really, who knows, but it does tax the sick.

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  2. jstults March 25, 2010 / 1:50 pm
    Good point RV:

    So……taxing hospitals = no increase in price to consumers & CEO’s covering the difference……
    or…
    Taxing hospitals = increase in prices and no change to the CEO’s salaries?

    See Price Elasticity of Demand and Tax Incidence; your second option is probably more likely given the inelastic demand for health-care services.  No matter where the bulk of the burden falls, a new tax will lower the quantity of health-care supplied.  Or you could look at it as a way for local govs to siphon off some of that big new subsidy from the feds, there’s a fine example of government efficiency.  How many Peters can Paul pay?

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  3. Gene . . . March 25, 2010 / 4:18 pm
    They don’t have to charge sick people more money, they have other alternatives like raising the price of parking and food for visitors, or paying  janitors and nurses less money. Fellas, taxes don’t have a negative impact on a business. Just ask Esrati. He may have missed more than a few classes regarding this subject.

    Essentially businesses do not pay taxes. They pass the cost along to customers. That is a fact, Jack.

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  4. jstults March 26, 2010 / 7:48 am
    Nearly Prescient Me:

    …a new tax will lower the quantity of health-care supplied.

    Health Care Reform Includes New Taxes
     
    Gene Ellipsis:

    Essentially businesses do not pay taxes. They pass the cost along to customers. That is a fact, Jack.

    The burden is shared, the business will raise the price as high as the market will bear, but no higher; the equilibrium price is the same no matter who ‘pays the taxes’.  Anyway, the quantity goes down, so if it’s something you want to buy that’s being taxed, well, sucks to be you…

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  5. Joe Lacey March 26, 2010 / 9:42 am
    “you want to tax hospitals which raise prices on the sick which transitions a larger tax burden to sick people? Short form……..You want sick people to pay for schools?”

    Doctors offices are taxed, drug companies are taxed, pharmacies are taxed, medical supply companies are taxed, health insurance companies are taxed and for profit hospitals are taxed…sick people already pay for schools RV.

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  6. Sammy76 March 26, 2010 / 10:34 am
    Essentially businesses do not pay taxes. They pass the cost along to customers. That is a fact, Jack.

    While I don’t disagree completely with the statement, it really isn’t a “fact.”  Rather, it’s a particular perspective of economic activity that fits within a larger economic (and often political) viewpoint.
    I suppose you could make an equal argument that customers don’t really taxes, businesses do, because if there is a high tax rate on the customers, then businesses may have to pay them more more money, which may come out of the business’s profit (effectively this is what happens in cities like Boston, LA and  New York, which is why certain forms of business that rely on thin profit margins do not work well in these cities).
    Taxes and their effect on corporations and individuals only make sense within a larger supply/demand dynamic.  Overly simple statements such as this are slogans, not facts.

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  7. Jesse March 26, 2010 / 11:18 am
    Sammy,
    I agree that overly simplistic statements confuse issues.
    That said, corporations do not have money.  The owners of Corporations have capital.  That capital is currently being utilized by a corporation.  Businesses do not determine how much money they will pay employees based on how much the employee needs to live.  Businesses pay money to employees based on the value of the service the employee can provide.  In the cities that you name regulations exist that force payment that is higher than the value of certain employees, causing unemployment to be higher than it would otherwise be.
     
    The only beings that can pay taxes are people.   Corporations are not people.  It doesn’t matter that you are acting as a consumer or a producer when you are taxed.  It only matters that taxes hurt people.

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  8. Sammy76 March 26, 2010 / 2:16 pm
    Well, setting aside consistent supreme court rulings that corporations have similar , if not the same, rights as individuals … :)
    Businesses may or may not pay employees based off of how much they need to live.  Again, it depends on the labor market.  If the market is tight, absolutely the corporation will pay employees based off of cost of living.  A computer scientist provides no more service here than in San Francisco, but they do not get paid the same wage.
    Finally, the statement that “it only matters that taxes hurt people” is obviously an oversimplification.  If we had 100% tax rate, we’d have slavery.  If we had a 0% tax rate, we’d have anarchy.  Both could be argued that they hurt people.  The point at which taxes “hurt” people is extremely complex.

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  9. Jesse March 26, 2010 / 4:07 pm
    Sammy,
     
    Corporations are not people and cannot have wealth regardless as to the whims of men in robes.
     
    Businesses do not base pay rates off of cost of living.  Pay rates are negotiated by agents of the business and the potential/current employee.  It may be true that the compensation demands of the employee may be greater to accept a position in San Fransisco.  This can be true for many reasons, one of which may be a higher cost of living.
     
    To say that San Fransisco companies are paying a wage determined by the level of taxation is to say that the dog is happy because his tail is wagging.  It isn’t true.  The dog may be happy, and the tail may be wagging; but the tail wag doesn’t make the dog happy.
     
    Consider the logical implications as to what you are saying…If the corporate tax rate were 99%, then everyone would be making a higher wage (at least nominally) than if the tax rate were 10%.  What generates the additional wealth that the companies are able to pay to their employees more?  According to your statement, it would seem to be the higher tax that generates the ability to pay more.
     
    In fact taxes eliminate capital from the market and drive down investment in capital improvements (which lead to higher wages) and the ability to higher those employees that are only marginally valuable because of the confiscation of the capital to make the investment.  Taxes cause free capital to be decreased which limits the better use of the capital, hurting all people (except government employees, who live off of the plunder).
     
    To the extent that “taxes” are compelled via force, they hurt people.  To the extent that “taxes” are not compelled via force, they do not hurt people as much, but can no longer be called “taxes.”

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  10. Sammy76 March 26, 2010 / 4:22 pm
    Right.  I agree with your mental argument (99% vs. 10%) — but I’m arguing that it’s not a linear relationship.  You seem to be implying that there’s a one-to-one relationship between higher corporate taxes and higher individual expenses.  It’s certainly true in the extreme that higher corporate taxes are borne by individuals, but not necessarily at lower levels.  That’s why I say that the statement “corporations don’t pay taxes, people do” is a gross oversimplification.  An economy is perhaps the most complex man-made system, and I’d argue that no economic truth can be presented as such a black and white truth.
     
    Also, corporations absolutely can have wealth.  Most major corporations pay that wealth back to stockholders in the form of dividends, but many hold on to that wealth in the same manner that you and I do — through investments and savings.
     
    Finally, taxes do not necessarily cause free capital to be decreased.  It causes free capital to be redirected.  We can discuss whether it gets redirected to the right place or not (and I think we’ll both agree it often does not get redirected to the right place, but sometimes the market doesn’t move capital to the right place either — see the banking industry right now).
    Also, I don’t get the dog analogy.  Sorry!

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  11. Jesse March 26, 2010 / 5:33 pm
    Corporations are owned by people.  It isn’t the corporation that actually has wealth.  It is the individual who owns the company.  I understand your statement of accounting rules (RE) and legal framework (corporate protection provided to business owners) is true.  I am saying that it is a misunderstanding in economic terms.
     
    Taxes are necessarily a removal of capital from the market.  Capital is taken from the free market and moved into the government’s hands.  It is then not free.  It is owned and controlled by the government.  That it is directed by the government into various directions does not make it free.
    Keynesianism run amok.

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  12. jstults March 26, 2010 / 6:12 pm
    That it is directed by the government into various directions does not make it free.

    But is it any less green?

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  13. Shortwest Rick March 26, 2010 / 8:45 pm
    Jesse, I don’t get it, what is Keynesianism run amok? Keynesian theory is an economic principle that depends on full employment, rejects the notion of natural business cycles and says government should only become involved in reinvestment when the private sector fails to maintain full employment because government is cumbersome and slow to respond to changing economic conditions. Whether the theory in of itself is right or wrong is debatable but I don’t get how it can run amok, please explain.

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  14. Shortwest Rick March 27, 2010 / 1:29 am
    David, is it time to tax hospitals… ultimately I agree with Gene that the end consumer bears the burden of tax, impose or raise tax on business and they have to pass it on to the consumer as a cost of providing the product. Now, if you ask should we have a tax code that allows some companies to operate as non-profit while amassing millions, paying their CEOs millions, exempt from tax while the sandwich shop across the street is taxed up to 39%… that’s a different question. What’s fair and what isn’t, if we think of taxing every square foot of property to pay for things we call basic services then obviously cemeteries would be ponzi schemes and hundred story buildings would pay one percent per square of footprint compared to the sandwich shop.
     
    It’s time to realign our taxation strategy, that’s the statement of the 21st century. I had a conversation a couple of weeks ago with a Tea-bag, aka dittohead, enlightening, they have rewritten history to where this country was founded in 1620 by Puritans from England who came to escape taxation, he told me Christopher Columbus 1492 is liberal bullshit propaganda, Christopher Columbus never existed. Then of course he accused me of drinking the liberal kool-aid. Back to the point of taxation, we have a division down the middle of the country, one side thinking their tax money is being spent to subsidise corporate America to make the few rich richer, the other side thinking their tax money is being spent to support individuals too lazy to work and both sides feeling resentful. There is a middle here, both sides believe their tax money is being spent irresponsibly, it’s just a question if you believe responsible government will return your investment in a way that benefits you or if you believe really rich people will return your investment in a way that benefits you, neither one seems to be on the horizon. So, the first thing I looked up was the Mayflower Compact which the Tea-bags call the original constitution, it was actually an agreement that once they got off the boat they would look after each other and wouldn’t turn on one another in order to preserve their community. The next thing I looked up was taxation rates in other countries, civilizations thousands of years older than the United States to see if we could take a queue from them, just for conversation of course, the link is to Japan’s tax structure with other countries at the bottom of the page, here’s your bone David…
     
    Corporate tax in Japan: Benefits to senior employees – mainly bonuses and compensation paid to employees are allowable as an expense. Nevertheless, payments of unreasonable amounts to directors will not be allowed as an expense.

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  15. Shortwest Rick March 27, 2010 / 3:24 am
    And of course, if you click around on the other countries you may note that United States is the only country that taxes single individuals twice as much as they tax married individuals while denying marriage rights to a segment of that single population.

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  16. Ice Bandit March 28, 2010 / 11:26 am
    David Esrati’s Dream
    by El Bandito
    When evening falls and Morpheus calls
    to our friend Dave Esrati,
    his lids decline signaling the time,
    to rest his weary body,
    but when David dreams, or so it seems,
    in sleepy relaxation,
    he dreams not of hot and naked gals,
    but new forms of taxation.
    For when David enters REM
    to that dreamy world of wonder,
    new thoughts of stately snatch and seize,
    rob, rip-off and plunder.
    Only logical, dear David thought, since we
    tax both gas and street,
    we need to levy a hefty charge
    so we’ll tax the people’s feet.
    Then David let out a sleepy sigh
    his mind in dream delight,
    since the sun’s a constant energy source,
    we’ll then tax Ol Sol’s light,
    we’ll surcharge water, the wind, the sky,
    then David did declare,
    “so you’ll not meet death, at a quarter a breath,
    we’re gonna’ tax the air.”
    A tax on beauty, charm and wit,
    were David’s next dream wishes,
    a levy on gerbils, dogs and cats,
    and ornamental fishes,
    a hefty surcharge, both small and large,
    let there be no mistaking,
    nothing escaped the taxman’s grasp
    in his dream undertaking.
    But alas, it ended as all dreams must,
    with the morning’s alarm ring,
    with an open eye, David did decry,
    and from his bed did spring,
    but we he awoke, and this ain’t no joke,
    from the dream he shan’t forget,
    his taxing scheme and his taxing dream
    caused his bed to be wet…….
     
     
     
     
     

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  17. Gene . . . March 28, 2010 / 12:47 pm
    I want that on a tee shirt.

    Some states want to tax bowling and entertainment like clowns. Why not just tax us on tax, tax us for heart beats, tax us for the time in between heart beats, tax us if our heart beats stop….

    liberals just are not that creative. Their only solution is tax. And then that tax is misused after it has gone through the ringer of the government. My $1.00 tax has the effect of $.09 after the government get a hold of it. Can a liberal come up with a solution to any one problem that does not have a tax associated with it?
     

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  18. David Esrati March 28, 2010 / 1:46 pm

    Dayton has a poet laureate. Ice Bandit, Bravisimo.

    Contrary to popular belief- I don’t believe in taxing everything- I believe in taxing things evenly.

    Big difference.

    Go sell Gene a tshirt.

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  19. Gene . . . March 28, 2010 / 3:27 pm
    Taxing things evenly – everyone should pay income tax then, at the same percent.

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  20. David Esrati March 28, 2010 / 3:39 pm

    Gene- as long as taxes only kick in once you get past a certain level- I might agree with you.

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  21. Gene . . . March 28, 2010 / 4:13 pm
    Why past a certain level? Everyone should contribute, if you want FAIR. The fact is you do not. You want rich people to pay for everything. Funny thing is they already do.

    I propose a 7% federal income tax with a min. living tax of $500 per person. Now that is fair and even.
    No deductions. No business income tax. Just a simple tax for all. And then our government can work with what they have, not work with “printed” money.

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