Friday, August 28, 2009

The Robin Hood Tax

The actual health care reform bill (House Bill 3200) reported by the Congress on July 14 - which aims to " provide affordable, quality health care for all Americans and reduce the growth in health care spending",- is vigorously opposed by conservatives as well as the insurance companies which regard the proposed publicly funded system as a threat to their profitable activities.

But there is one fundamental point which deserves attention on the revenue side. The bill introduces an additional tax of 1% on wealthiest Americans to finance health expenditure of 20% worst-off citizens. This might be seen as one of the most radical proposals ever passed through US legislation. It contrasts with Bush policies which introduced tax cuts benefiting mostly the rich Americans. Yet it might appear modest by European standards, notably in continental countries which provide a high level of social protection for all citizens.

The bill contains however the recognition of the principle of solidarity, that is, in the US society the rich should pay for healthcare of the poor who cannot afford it. This will not affect much the wide disparities in income which exist in the US. According to Robert Reich, former US Labour secretary, 1% of the wealthiest in the US has about 20% of total income, the highest level since 1928.

Critics on the conservative side argue that this measure will affect the tendency to invest and innovate and therefore future jobs. But, if a small fraction of this wealth means a better access to healthcare for a larger number of American citizens, who will get more regular checks and live longer in a better health and therefore be more productive, the positive effects on the US economy will be much greater and long lasting.

This is less an issue in Europe, although European societies are increasingly confronted with widespread poverty. Why not introduce a similar Robin Hood tax in Europe, not to finance healthcare but consumption for the poorest to meet their basic needs? This would give a signal that democracy is not only for the rich but also promotes social justice and solidarity.

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