... and justice for all.

Go read this short article from the Nation: http://www.thenation.com/doc/20090803/edelman.

In my dream world, there's an institution that the indigent may turn to for legal protection. This body does not just protect their fundamental rights against the deprivation of liberty, but also of property. I see an institution that helps the indigent file for bankruptcy, protect against foreclosure fraud, and assist them in creating and administrating wills. I see an institution that provides guardianship services for the incompetent, at the behest of the Court, and protective services for children.

Unshackling public legal service grants? That sounds like a good start. It's the first step to encouraging states to start public institutions to protect the rights of the poor, minors, incompetents, and the elderly. Having practitioners of law assist people in obtaining social security and disability will go a long way to alleviating poverty in this nation, and protecting them against predatory loan offers by advising them of their rights will also help to prevent a future sub-prime loan crisis.

It's not like this will damage the legal industry. 80% of inquiries I get with regard to the law are simple, one-sentence answers. Most attorneys in a legal consultation would give this away for free (at least, most ethical and reasonable attorneys would do so). And as a public employee, I feel almost compelled to assist people in solving their issues.

Think about it some more. A place where victims of domestic abuse could have civil protection orders filled out for them. A place for indigent wives to escape from abusive husbands through a divorce.

Yeah. It sounds good to me. These days, you need a lawyer to get by unscathed, it seems.

The Health Bill: Coverage for the Providers only

The Senate Health Committee is ready to unveil a proposal to Congress that would tax the wealthy, create a government-run insurance company, and force employers and employees to get everyone onto a health-care plan. I am all for the spirit of change in this nation, but I prefer it (immensely) to be done thoughtfully, and without the ill-conceived alacrity with which this bill has been pushed. It’s my hope that Democrats and Republicans alike attack this bill and shoot it down, for it is built up on fundamentally-flawed principles, and will only serve the health care providers in the long run.

Oh, sure, I’ve been accused of being cynical. “Desperate times call for desperate measures!” Those who know me (personally) likely know my position with regard to the health care industry. However, that’s not the perspective I want to offer here; what I’d like to offer is the following proposition: by getting everyone onto an insurance plan, the winners will be the health care providers. By ensuring that either an insurance company or the government picks up the bill for U.S. citizens, the health care providers have closed up a (small) gap in their profit-making machine – the dreaded insolvent patient. The scheme proposed by Congress will drastically lower the number of bankruptcy filers who are forced into bankruptcy protection due to medical bills; the scheme will not, however, address the reason why people have to file for bankruptcy in the first place: the excessive costs of health care.

And we all know why health care costs so much. Procedures that people (arguably) do not need. A lack of incentive to engage in preventive health care. Keeping people overnight for minor reasons. Doctors that make exorbitant salaries. Bad diagnoses. It has been estimated that unpaid medical bills only account for 6% of the lost revenue to medical care providers; thus, that, alone, cannot be the reason why costs are through the roof. It’s not unreasonable to look at the factors above as the primary reason why, despite the economic recession, health care premiums will rise 9% (or more) for the next fiscal year (by forecast). It’s not unreasonable, therefore, to look at addressing the problems above, rather than looking at merely reducing bankruptcy filings.

It’s time to take a page out of the public health care system, to see how those Western nations – which spend, on average, less than 50% of what the U.S. spends on administrative costs in the health care industry – address health care costs. So, here’s my proposal:

First, Medicare/Medicaid shall provide coverage to the elderly, dependents, the disabled, and to the indigent, regardless of their infirmity or condition. All must submit proof of their status upon admission to a health care provider. All health care providers must admit the elderly, children, the disabled, and the indigent, and treat them, and shall be responsible for gathering the required information.

Under Medicare/Medicaid, health care providers shall be paid not by the hour or by the procedure, but by the number of patients served. Health care providers shall be paid additionally based on the number of patients successfully treated. Health care providers may be paid above and beyond the numbers served and successfully treated by petition to the government. Upon showing of the reasonableness of a particular choice of procedure, Medicare/Medicaid shall reimburse the health care provider for the reasonable value of the services offered above and beyond the numbers. Abusers of the system, however, shall be punished accordingly.

The point of this system is to incentivize preventive medicine. If the elderly, dependents, the disabled, and the indigent are able to receive regular, preventive medical check-ups, then there is less of a chance that they will require the sort of treatment that can cost thousands of dollars. Naturally, there has to be a cap on how often one can visit a health care provider, but there is a benefit to health care providers to see more patients who are still relatively healthy, to provide appropriate care, and to discharge them. And, of course, there is a detractor to accepting more patients than can reasonably be covered – malpractice.

Second, no health insurance company shall be permitted to offer health coverage unless they are a qualified tax-exempt, non-profit entity. This means that the health insurance company shall be not be permitted to retain profits, and must, instead, expend any profits above and beyond normal growth. Acceptable expenditures should include research and development, as well as donating to hospitals and health care providers. Further, because of the Medicare/Medicaid structure, there will likely be fewer unhealthy adults and children in the health insurance pool, thus reducing the risk to insurance companies. The result: a drop in premiums for care. Plus, if Medicare/Medicaid is setting the bar for payment, insurance companies may adopt a similar system, which should lower costs to the insurance companies.

What do you get from this system?

A system that encourages preventive medicine at a young age.
A system that provides care and coverage for the poor, disabled, and elderly.
A system that discourages unnecessary procedures and spending.
A system that lowers premiums for the insured.
A system that lowers risk for the insurer.
A system that does not involve the government creating its own insurance.
A system that still discourages bankruptcy filing, due to coverage to the indigent.

In short: the health bill proposed, while a step made with the right spirit, is a step in the wrong direction. We must address costs rather than address the losses to providers, which have long been shown to not be a major factor in rising costs. The focus should remain on the exorbitant costs of health care, and on ways we can modify the existing system to address them.

In all fairness?

There has been much discussion in the Republican camp about implementing a “fair tax” policy in the United States. As a result, I took a look at the website – www.fairtax.org – and searched for information with regard to whether the policy is a good idea. The idea of a single sales tax – 23% -- on everything, and the elimination of income taxes, seems, on the surface, to be the fairest and most equitable way to collect taxes from individuals. On second glance, though, the idea of a single sales tax is progressive (not in the tax sense, but in the political sense), but not necessarily in a good way.

To start, the proposal would only affect the federal taxes. This means that you would not have to pay federal income taxes, either as an individual or as a business. That sounds great, right? Keep in mind, though, that it does not eliminate state income taxes, state sales taxes, state luxury taxes, local property taxes, local income taxes, etc. The measure is only intended to meet the needs of the federal government, so the average taxpayer still has to contend with whatever the state decides to do to him. For the moment, though, let’s set aside these concerns, and focus on the taxes at the federal level only.

When it comes to economics, conservative pundits often turn to the “Father of Economics”, Adam Smith. After all, he was the rule-maker for this crazy-little-thing called capitalist economics. Here’s what Smith had to say about taxes: “[t]he subject of every State ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State.” Smith’s position is clear: people ought to contribute to a country based on their abilities, which is indicated from the revenue they get while being protected by the State. On the other hand, Smith’s writing is inimical to the idea of taxing wages: “a direct tax upon the wages of [labor] must, in the long run, occasion both a greater reduction in the rent of land, and a greater rise in the price of manufactured goods, than would have followed from a proper assessment of a sum equal to the produce of the tax, [levied] partly upon the rent of land, and partly upon consumable [commodities]." Thus, you have two positions: (1) people ought to be taxed on the money they make (revenue); but (2) people ought not be taxed on the money that they earn (wages). What’s the difference?

To find consistency within Smith’s arguments, one must simply look at the two words: revenue and wages. From the perspective of a firm, revenue is the money that comes in, and wages are one of the costs of business. For household, earnings are the money that comes in, and expenditures represent the costs leaving the household. If you put these concepts into a cyclical diagram, you get the wealth cycle. According to Smith, what should be taxed is the expenditures/revenue part of the wealth cycle, but not the wages/warnings part. Thus, a tax on consumption is consistent with what Smith has stated. The “fair tax” policy meets this ideology, because it is a tax on consumption. So far, so good.


However, that is not the end of the analysis. Check out this website: http://www.progress.org/banneker/adam.html. Notably, read the following:

“Bearing all these things in mind, there are two types of taxation which obtain Smith's recommendations: a tax on luxury consumables and a tax on ground-rents (the annual value of holding a piece of land).

“On the subject of luxury consumables, he is adamant about the [definition] of 'luxury' and of 'necessary.' By his definition, a 'necessary' may vary from place to place and from time to time. At the time of his writing, linen shirts, leather shoes and a minimum of food and shelter were definitely to be regarded as essential to a [minimum] decent standard of living. Taxes on salt, soap, etc., he harshly criticized as inequitably taking from the poorest elements of society. Taxes on luxuries, which were to include tobacco, he considered excellent in that no one is obliged to contribute to the tax: "Taxes upon luxuries have no tendency to raise the price of any other commodities except that of the commodities taxed ... Taxes upon luxuries are finally paid by the consumers of the commodities taxed, without any retribution."

“More deserving of [praise] is the tax on ground-rents: "Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and [labor] of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them."”

So, Smith adds a few quirks to the basic concept of consumption-based taxation. First, taxation of necessities is a bad idea because it “inequitably” taxes the least-fortunate. Second, taxation of luxuries is a good idea because the obligation to pay a luxury tax may be easily avoided by not consuming the luxury. Finally, Smith posits that “revenue which the owner, in many cases, enjoys without any care or attention of his own” should be subjected to taxes; this is revenue from capital gains or investments. Consequently, a basic tax on consumption is not Smith’s answer – rather, it is careful taxation on certain consumables and forms of revenue that should be applied.

Fair tax advocates have the right idea – tax consumption instead of income. However, fair tax advocates have politely dodged issues such as tax incidence and regressive application of taxes based on proportional expenditures. Fair tax advocates, through their policy, would tax necessities as much as they would tax luxuries. The fair tax policy also does not include a taxation upon rents – income not earned directly through labor – which is something that Smith suggested would be an ideal tax.

Thus, I present the following “fair tax” policy, modeled upon the suggestions by Smith:

· A sales tax on luxuries, up to 30% based on value.
· A sales tax on the sale of homes, up to 40% of the amount above the tax-appraised value.
· No sales tax on necessities, such as food, clothing, rent, or fuel.
· A sales tax on rent income, up to 25% based on amount received.
· A tax upon revenue from investments, mutual funds, and other non-labor revenue, up to 35% of gain.
· No income or FICA taxes based on earnings.

But a blanket sales tax? No, thank you. That’s one thing about Canada I didn’t really enjoy.