Reinventing Abusive Taxation

15 Dec, 2008 by McQ

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State government may have to make temporary spending cuts, but when it gets itself into deficit trouble from overspending, it turns to the one source of revenue it has – state taxpayers (unlike the Fed, states can’t just print money). And it also comes up with some innovative ways to both raise money and push its agenda. Take NY (please):

The plan will come with a host of revenue raisers — increased taxes on hospitals and insurance policies, for instance — and at least one new assessment, a so-called obesity tax on non-diet soda to raise $404 million. The governor also is contemplating requiring new license plates to raise cash, reviving sales tax on clothing purchases, removing the tax cap on gasoline and threatening to require Indian retailers to collect taxes on sales to non-Indians by signing into law a bill passed earlier this year by the Legislature.

Obesity tax? Yup, you fatties take heed – you’re the next government project. And, of course, there’s always gas and health insurance to turn too.

When you hear all of the talk about the “present system” being too expensive and in need of government intervention, remember this little goodie:

The biggest hits will be to insurance companies, which will be asked to come up with about $855 million in extra assessments. Those amount to more taxes on health insurance plans, increased sales tax on hospital discharges and more shifting of general fund costs to the Insurance Department so that insurance companies pay for programs such as Timothy’s Law, the mandated coverage of mental health treatments.

Further, the governor also will propose a new tax on some physician services to raise $50 million.

The bottom line will be a net increase in costs that ultimately get paid by subscribers, thereby increasing the cost of coverage at a time that most upstate insurers are struggling.

Perhaps a New Yorker or two will save this information and trot it out the next time we hear claims that it is the greedy insurance companies which are driving health care costs through the roof. What Gov. Patterson is proposing isn’t new or unusual – it is what happens when government intrusion becomes widespread and is considered, by the entity with the monopoly on force, to be of a higher priority to fund than those private citizens might hold.

And if you think there’s a priority to cut spending, think again – Patterson apparently wants to make NY a welfare magnet state with those new tax dollars:

The Paterson administration also announced steps yesterday to expand the state’s social services net, including a 30% increase in welfare payments over three years starting January 2010, increased money for food banks and expanded access to the state’s Family Health Plus program.

That sort of nonsense will continue as long as the state can arbitrarily spend on whatever it chooses. That and being left to decide what it considers to be the proper role of taxation is (in this case, “social change” vs. simply funding necessary government) and that virtually anything, for any reason, is taxable.

[HT: Claire – Crossposted at QandO]