Saturday, September 29, 2007
Taxes, Cigarettes and Health Care
There's a big hullaballo in Tennessee over the state's plan to crackdown on Tennesseans who go into neighboring states to buy cigarettes.
Tennessee is bordered by eight neighboring states, tied with Missouri. (I thought it was only seven.) If Tennessee lowered its cigarette taxes to less than all the neighboring states, or at least the majority, people from neighboring states would come to Tennessee to buy cigarettes, likely increasing Tennessee's overall tax revenues from cigarettes. Plus, Tennessee has one of the heftiest sales taxes in the country. People from other states coming to Tennessee to buy cigarettes would probably buy a few other products in the process, thereby further increasing Tennessee's tax revenues.
This got me thinking about health care costs. Hillary and others are pushing "free" health care. Which means free for those that don't pay taxes or don't have clever CPAs. I recall that for each year that I do my income taxed I come close but never quite make the cut to claim any medical expenses for deductions.
Checking the IRS guidelines on medical deductions I find "You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (Form 1040, line 38)." (Emphasis added) The example the IRS gives:
Instead of creating a huge, expensive bureaucracy, why doesn't the government give us a better tax break on what we spend on health care? If I could just deduct what I pay on health insurance it would be major. Or, if my employer could get a better break for paying for insurance so that it could pay 100% of the premiums.
A plan along these lines would allow us the freedom to continue to choose our health care providers as we wish. Such a plan would continue to reward innovation in medical care that has made our system one of the best in the world.
But, it seems no matter what the circumstance, be it cigarettes or health care, politicians and bureaucrats can only think in terms of higher taxes and wielding more power which increasingly put the populace under their thumb. Of course, that's a big reason many people go into politics or become bureaucrats, they like having power over others.
Smokers who cross the state line to buy cheaper cigarettes could see their cars searched or seized as Tennessee tax agents start cracking down on the practice, revenue officials announced Friday."protect its corner stores and tobacco shops", if that's not a classic case of BS, I don't know what is. The states only interested in "protecting" its tax income. People from other states think Revenue Commissioner Reagan Farr, you've managed to make your state look dumber faster than Fat Phil Fulmer could if he started recruiting at Leavenworth. I agree.
Stores in border towns have seen business dip since July 1, when the state more than tripled its tax on cigarettes to 62 cents — a bump that made per-pack taxes in Tennessee higher than any of its neighbors.
Laws already on the books prohibit people from bringing more than two cartons of smokes across the line on any one trip, and now David Remke with the state Revenue Department is warning Tennesseans that his staff plans on enforcing the often-ignored rule.
He said the state is out to protect its corner stores and tobacco shops.
"It's not fair to them that they've lost a lot of their business," said Remke, director of special investigations. "Really from this point forward, people need to be aware" of the law.
Emphasis added
Tennessee is bordered by eight neighboring states, tied with Missouri. (I thought it was only seven.) If Tennessee lowered its cigarette taxes to less than all the neighboring states, or at least the majority, people from neighboring states would come to Tennessee to buy cigarettes, likely increasing Tennessee's overall tax revenues from cigarettes. Plus, Tennessee has one of the heftiest sales taxes in the country. People from other states coming to Tennessee to buy cigarettes would probably buy a few other products in the process, thereby further increasing Tennessee's tax revenues.
This got me thinking about health care costs. Hillary and others are pushing "free" health care. Which means free for those that don't pay taxes or don't have clever CPAs. I recall that for each year that I do my income taxed I come close but never quite make the cut to claim any medical expenses for deductions.
Checking the IRS guidelines on medical deductions I find "You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (Form 1040, line 38)." (Emphasis added) The example the IRS gives:
Your adjusted gross income is $40,000, 7.5% of which is $3,000. You paid medical expenses of $2,500. You cannot deduct any of your medical expenses because they are not more than 7.5% of your adjusted gross income.Looking at the median family income of $58,526 reported by the Census Bureau for 2006, the typical American family would have to incur over $4,389.45 in medical expenses before getting an income tax break. That's over $84 per week. For most of us the medical deductions for medical care are worthless.
Instead of creating a huge, expensive bureaucracy, why doesn't the government give us a better tax break on what we spend on health care? If I could just deduct what I pay on health insurance it would be major. Or, if my employer could get a better break for paying for insurance so that it could pay 100% of the premiums.
A plan along these lines would allow us the freedom to continue to choose our health care providers as we wish. Such a plan would continue to reward innovation in medical care that has made our system one of the best in the world.
But, it seems no matter what the circumstance, be it cigarettes or health care, politicians and bureaucrats can only think in terms of higher taxes and wielding more power which increasingly put the populace under their thumb. Of course, that's a big reason many people go into politics or become bureaucrats, they like having power over others.
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I did not realize you actually had a blog site until this morning. Well.......oh boy! I promise you will also get sick of me posting.
TN used to frighten its citizens the same way, concerning state / national lotteries, before TN finally realized a few things, and got on that band wagon. I lived there before they let the lotto in.
Cigarettes and alcohol will never be banned. It's not rocket science. It's all that tax income. Money rides right over the top of everything to the tax spenders. TN has no state income tax, and very little property tax to speak of. They have to shaft their citizenry in other ways.
The same with coal, gasoline, oil, etc. Until wind and sunlight can somehow be profited from and also taxed, we shouldn't bet on a huge push for energy independence. Too many 401K plans, retirement funds, stocks and bonds portfolios are tied up in energy companies and utilities companies. Rail and water shipping companies, on and on. Regardless of any other B.S. hollered about from the liberal arena, or elsewhere.
On the one hand I can understand that. On the other, it's too bad.
I heard Hannity on the radio the other day, loosely quoting Churchill: If not liberal in your 20's, you have no heart. If not conservative by your 40's, you have no brains."
TN used to frighten its citizens the same way, concerning state / national lotteries, before TN finally realized a few things, and got on that band wagon. I lived there before they let the lotto in.
Cigarettes and alcohol will never be banned. It's not rocket science. It's all that tax income. Money rides right over the top of everything to the tax spenders. TN has no state income tax, and very little property tax to speak of. They have to shaft their citizenry in other ways.
The same with coal, gasoline, oil, etc. Until wind and sunlight can somehow be profited from and also taxed, we shouldn't bet on a huge push for energy independence. Too many 401K plans, retirement funds, stocks and bonds portfolios are tied up in energy companies and utilities companies. Rail and water shipping companies, on and on. Regardless of any other B.S. hollered about from the liberal arena, or elsewhere.
On the one hand I can understand that. On the other, it's too bad.
I heard Hannity on the radio the other day, loosely quoting Churchill: If not liberal in your 20's, you have no heart. If not conservative by your 40's, you have no brains."
# posted by 
: 3:16 PM
: 3:16 PM
Post all you want. I enjoy discussion and new ideas.
I lived my first 38 years in Tennessee. I love many things about the state, especially the mountains. But, state level politics have generally been a sore spot.
I've spent that last 17 years on KY/OH border. Living here, I get to see the interplay between the states. KY has lower liquor and cigarette taxes. There are stores in KY that make a living off of Ohioans coming to KY to save money. This place is huge, as big as many grocery stores. It sells beer, wine, liquor and tobacco plus a few other odds and ends and located directly across the river from Cincinnati.
Many of my co-workers who live in Ohio make runs to this store where they drop $200-$300 dollars easy. But they save bunches over the cost in Ohio. While Cincinnati is the "big city" of the area, the smaller towns, especially Newport, Covington and Florence, are winning the war to attract consumers.
I lived my first 38 years in Tennessee. I love many things about the state, especially the mountains. But, state level politics have generally been a sore spot.
I've spent that last 17 years on KY/OH border. Living here, I get to see the interplay between the states. KY has lower liquor and cigarette taxes. There are stores in KY that make a living off of Ohioans coming to KY to save money. This place is huge, as big as many grocery stores. It sells beer, wine, liquor and tobacco plus a few other odds and ends and located directly across the river from Cincinnati.
Many of my co-workers who live in Ohio make runs to this store where they drop $200-$300 dollars easy. But they save bunches over the cost in Ohio. While Cincinnati is the "big city" of the area, the smaller towns, especially Newport, Covington and Florence, are winning the war to attract consumers.
I too, love the mountainous areas of northeast TN and western NC. I lived in Johnson City for a little over a decade.
Northeast TN is a great place to live, provided you bring your career with you, as I was able to do. Not so great a place for your kids to get educated, or be able to have a great career later on down the line. Although sales tax was outrageous, everything else (at least then, and save gasoline) was certainly reasonable.
One could live "in the boonies" surrounded by trees and hills, spelled p-r-i-v-a-c-y, yet have access to all reasonable needs within a 30 minute drive one way.
All things considered, I miss it. Great place to retire to, if chirping birds, small furry creatures with the occasional bear, fishing, and sitting on you back deck surrounded by nature, naked, while sipping coffee and tapping on your lap top, is your cup of tea.
And if someone does not like what you are doing, and knows what you are doing (tapping while naked) they would have to be trespassing.
I'm just saying, about the naked part. Although Ben Franklin was very fond of his morning air baths.
Northeast TN is a great place to live, provided you bring your career with you, as I was able to do. Not so great a place for your kids to get educated, or be able to have a great career later on down the line. Although sales tax was outrageous, everything else (at least then, and save gasoline) was certainly reasonable.
One could live "in the boonies" surrounded by trees and hills, spelled p-r-i-v-a-c-y, yet have access to all reasonable needs within a 30 minute drive one way.
All things considered, I miss it. Great place to retire to, if chirping birds, small furry creatures with the occasional bear, fishing, and sitting on you back deck surrounded by nature, naked, while sipping coffee and tapping on your lap top, is your cup of tea.
And if someone does not like what you are doing, and knows what you are doing (tapping while naked) they would have to be trespassing.
I'm just saying, about the naked part. Although Ben Franklin was very fond of his morning air baths.
# posted by : 8:36 AM
: 8:36 AM
From everything I've studied on the medical industry and economics, most of our problems in medicine come from the insurance being tied to employers in the first place, so giving companies a tax break would make things worse, not better.
Think of auto insurance or cell phone plans. They are constantly competing with eachother for more customers, so the packages always get better and cheaper.
Health Insurance is tied to what companies can pay. So, as companies made record profits, their charges went up with it. Because doctors charge the max of what they expect to get from insurance companies, the costs go up.
If medical insurance were more like car insurance or other term plans, you'd see compitition for us, the consumers, price pointed at what we can actually afford.
The solution? Give companies no tax breaks for providing insurance and provide breaks for individuals to buy it. This would re-align the insurance and medicine industry to the consumer instead of corperations.
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Think of auto insurance or cell phone plans. They are constantly competing with eachother for more customers, so the packages always get better and cheaper.
Health Insurance is tied to what companies can pay. So, as companies made record profits, their charges went up with it. Because doctors charge the max of what they expect to get from insurance companies, the costs go up.
If medical insurance were more like car insurance or other term plans, you'd see compitition for us, the consumers, price pointed at what we can actually afford.
The solution? Give companies no tax breaks for providing insurance and provide breaks for individuals to buy it. This would re-align the insurance and medicine industry to the consumer instead of corperations.
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