NCPA - National Center for Policy Analysis


July 24, 2007

Democrats who run the Wisconsin Senate have dropped the Washington pretense of incremental health-care reform and moved directly to passing a plan to insure every resident under the age of 65 in the state.  And, wow, is "free" health care expensive, says the Wall Street Journal.

How much will it cost?

  • The plan would cost an estimated $15.2 billion, or $3 billion more than the state currently collects in all income, sales and corporate income taxes.
  • It represents an average of $510 a month in higher taxes for every Wisconsin worker.

Who will pay for it?

  • Employees and businesses would pay for the plan by sharing the cost of a new 14.5 percent employment tax on wages.
  • Wisconsin businesses would have to compete with out-of-state businesses and foreign rivals while shouldering a 29.8 percent combined federal-state payroll tax, nearly double the 15.3 percent payroll tax paid by non-Wisconsin firms for Social Security and Medicare combined.

Is that all?

  • This employment tax is on top of the $1 billion grab bag of other levies that Democratic Governor Jim Doyle proposed and the Senate approved, including a $1.25 a pack increase in the cigarette tax, a 10 percent hike in the corporate tax, and new fees on cars, trucks, hospitals, real estate transactions, oil companies and dry cleaners.
  • In all, the tax burden in the Badger state could rise to 20 percent of family income, which is slightly more than the average federal tax burden.
  • As if that's not enough, the health plan includes a tax escalator clause allowing an additional 1.5 percentage point payroll tax to finance higher outlays in the future; this could bring the payroll tax to 16 percent.

Source: Editorial, "Cheese Headcases," Wall Street Journal, July 24, 2007.

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