Raise Taxes and Give the Money to Our Industry

It's hard to imagine a more naked example of rent-seeking than this one

A group representing Arizona hospitals is pursuing a ballot initiative that would tax the state's high-income earners to help pay the health-care tab for the state's neediest kids and adults.

The Arizona Hospital and Healthcare Association expects to file paperwork for the initiative later this week, aiming for a place on the November ballot.

It asks voters to raise the state income-tax rate 1 percentage point on income exceeding $150,000 per individual and $300,000 per couple.

The association estimates the initiative would raise more than $140 million each year to pay for health insurance for low-income children and adults, graduate-school medical education and reimbursement to hospitals that care for the poor.

In other words, the government will take the money and hand it over to hospitals to do the things they are already doing.  I could put together a heartwarming story too for my industry -- we think there should be a 1% tax on all Arizona residents for kids to visit parks and campgrounds to fight childhood obesity and improve their connection with nature -- but you don't see me rent-seeking like this.

My gut feel, though I have no direct evidence, is that this is being rushed through to beat the deadline on Obamacare implentation -- my guess being that this will be somehow moot once that program is in place so the hospitals want to get their licks in before anyone really figures out the new health care law.  Once the tax and program is in place, it will be virtually impossible to kill, even if it is irrelevent post-Obamacare.  Anyone have knowlege about this one way or the other?


  1. Bill L:

    Maryland implemented a similar tax surcharge on very high income individuals and discovered that they collected less total revenue after doing so.

  2. Colin:

    I can't help but notice how seemingly every new tax these days is designed to fall disproportionately on those with higher incomes. The politicians are out promising bread and circuses to the people -- but not to worry, someone else is footing the bill. A cynical person would view taxation as a license to steal to fund whatever pet cause you desire.

  3. perlhaqr:

    In other words, the government will take the money and hand it over to hospitals to do the things they are already doing.

    To be fair to the hospitals, they're doing it at least in part with the government's gun in their kidney. Hospitals can't turn away patients at the ER.

    Admittedly, I think the solution here is the take the gun off the hospitals, not turn one on "rich people", but, you can hardly blame the hospitals for wanting help paying for the things they're being forced to provide for free.

    Imagine if the parks you were running all had their contracts unilaterally changed to include a clause that you had to let anyone who made under a certain amount of money in without charge, and likewise let them visit the concessionaires, etc, gratis.

  4. Jeff:

    I wonder how the doctors who work at these hospitals feel about this proposed tax increase? (I assume most of them make enough to get hit with the tax).

  5. IgotBupkis:

    Alachua County, FL did that with a half-cent sales tax, as I recall. If you want to see the downside of that, just look into its history there.

    IIRC, a part of the ST revenue also went to operating free clinic services for the poor. Last I heard, very few were taking advantage of it, to the point where the ACty Health Dept. was actually ADVERTISING for more customers. "Hey, come, look, free stuff!! You didn't need it before, but hey, like, we're giving it away!!"


  6. Steve:

    Hospital Association president wasn't aware that 75% of all small businesses pay under the individual income tax system in Arizona. Said it won't change his mind, but hey, whatever, businesses can "afford it." Income taxes aren't the only tax hikes being proposed (or have already been approved) in Arizona. See http://www.azfec.org.

  7. Ken:

    Jeebus -- just call it "Do it to Julia!" and have done.