1-20-14 – Sen. Galbraith Explains Funding for Single Payer (VIDEO)

Sen. Peter Galbraith testified before the Senate Finance Committee on Friday, Jan 17, to explain how his bill (S.252) would pay for Vermont’s single payer healthcare plan, Green Mountain Care (GMC). Galbraith concluded his statement by insisting, “Whatever we do… it will look substantially like this bill. Not because I’m a smart guy, but because there really is no other way to do it.”

Galbraith Video

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The funding for a single payer system that needs to raise $1.6 billion in new taxes will come largely ($1.4 billion) from a payroll tax, 11% on the employer and 2% on the employee. $140 million will come from a 10% tax on non-wage income, including capitol gains, dividends, interest, wages earned outside of Vermont. $60 million will come from the elimination of the passthrough of itemized deductions, such as the home mortgage deduction and deductions on charitable giving. The amounts taxed will be capped at $113,000 and $113,600 respectively, the same rates that Social Security caps kick in.

If the cost of Green Mountain Care turns out to be more that $1.6 billion, Galbraith says, “You could adjust the rate [of the payroll tax] up.” Two other analysis of Green Mountain Care, one done by Rutland Treasurer (and EAI board member) Wendy Wilton and another independently commissioned and done by the Avalare Group, show GMC costing between $1.9 and $2.2 billion. Sen. Bob Hartwell pointed out during the testimony that if the larger number is in fact accurate, the combined payroll tax would be 16.25%.

Other points of interest…. Galbraith insisted companies that ensure their employees under federal ERISA laws will not be exempt from the payroll tax — in effect, they will pay twice. Teachers, municipal, and state employees will be “absolutely” included in the plan.

If Vermont decides to choose another funding method for single payer, Galbraith warns we are looking at an income tax with a low bracket of 15% and a high bracket of nearly 25% or an expanded sales tax, including services, clothing, food, etc., at a rate of over 19%. He considers neither option viable.

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