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28 IRET Congressional Advisory 1 (1994)

handle is hein.taxfoundation/iretcgadv0027 and id is 1 raw text is: IRET Congressional Advisory March 7, 1994 No. 28 Monumental Revenue Increases in the Clintons' Health Plan In its plan for a government-directed health care system, the Clinton Administration is proposing a huge upward leap in federal revenues. No previous revenue raising legislation comes even close in terms of magnitude. To gain an idea of how much money is involved, imagine that the government were to require Americans to pay an additional set of new taxes that are almost as large as either the individual income tax or existing payroll taxes. That is roughly the size of the revenue raisers in the Clintons' health plan. The Congressional Budget Office (CBO) estimates that the Clintons' proposal would collect over $1,000 billion in higher revenues during the four year period 1996-1999. Compare this with the size of some of the biggest previous revenue raisers. Past U.S. Treasury revenue estimates were that the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) would increase federal receipts by approximately $140 billion in the four years 1983-19861, the Omnibus Budget Reconciliation Act Of 1990 (OBRA-90) would collect about $130 billion in the four years 1991-19942, and the Omnibus Budget Reconciliation Act Of 1993 (OBRA-93) would collect approximately $190 billion in the four years 1994-19973. In short, the revenue increases in the Clintons' health plan are at least five times larger than those in any tax hike that preceded it. Chart 1 illustrates the magnitude of the Clinton plan's revenue increases compared to existing federal levies. The chart, which shows revenue sources for each year from 1996 to 1999, combines CBO estimates of the added revenues in the Clintons' health plan with other CBO estimates for the main categories of existing federal levies.4 During this phase-in period, the Clinton plan's estimated revenues would increase very rapidly. Although the present individual income tax would remain the largest single revenue source and social insurance taxes (social security and unemployment) would continue in second place, the Clintons' health plan would zoom from zero to third place despite the fact the Clintons' plan would not have been fully phased in by 1999. The breathtaking magnitude of the Clinton health plan's revenue raisers is at odds with the Administration's portrayal of its plan as one that avoids big revenue increases. President Clinton assured lawmakers, I believe as strongly as I can say that we can reform the costliest and most wasteful system on the face of the earth without enacting new broad-based taxes. ,5 In the report that accompanied the President's speech, the only acknowledged revenue increase was a rise in sin taxes, since revealed to be a proposed quadrupling of tobacco excises.6 Institute for Research on the Economics of IREJisanon-pnfittaxcxmpt5l1(c)(3)ecnmivphcyresearhandeducatna cmln nzakndwtedtningthnpubliabnitpiiinatwllprntecrnnomiox[ecup n h Taxation and efficient operation of the free market economy. 1331 Pennsylvania Avenue, N.W., Suite 515, Washington, D.C. 20004-1774 ! (202) 347-9570

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