Reforming Health Care: The Paradoxes of Cost

So let me explore with you why my judgment on this score proved inaccurate. In the proverbial nutshell, whatever happens in Washington in the weeks and months ahead, the United States is fated for the indefinite future to conduct a prolonged and difficult national debate on health care. The reason for this protracted and arduous argument can be summarized in a single word: cost. Yet, paradoxically, the rhetoric of unspecified cost reduction is used to avoid the painful choices needed to prune health care outlays, choices that inevitably involve agonizing denials of medical services in a world of finite resources. Medical costs cannot be controlled without denying something to somebody. Yet, paradoxically, the term “cost” is used in contemporary political discourse to avoid the difficult choices involved in such denials. It is easier to favor unspecified cost reductions, than to identify particular service denials that would actually reduce medical care expenditures. Elected officials are reluctant to deny medical services to cut costs, but health care costs cannot be meaningfully controlled without such service denials

The Enigma of Wynne

The five-justice Wynne majority used that case to make a major statement about the dormant Commerce Clause. In many respects, Wynne is an enigma that perpetuates an inherent problem of the Courts dormant Commerce Clause doctrine: the Court declares some ill-defined taxes as unconstitutionally discriminatory because they encourage in-state investment, while other economically equivalent taxes and government programs that similarly encourage intrastate economic activity are apparently acceptable under the dormant Commerce Clause. Wynne is thus more important than the immediate situation it addresses, and will have consequences beyond the immediate circumstances it addresses. A decision as enigmatic as it is important, Wynne raises as many questions as it answers. Among these are the continuing viability of external consistency and apportionment, concepts that have been central to the Courts formulation ofthe dormant Commerce Clause. Wynne also undermines the Courts traditional tolerance of the double state income taxation of dual residents because such double taxation can encourage a dual resident to undertake single-taxed in-state economic activity rather than make investments subject to such double taxation

Citizenship and Worldwide Taxation: Citizenship as an Administrable Proxy for Domicile

The United States\u27 worldwide taxation of its citizens is less different from international, residence-based norms than is widely believed and is sensible as a matter of tax policy. An individual\u27s citizenship is an administrable, if sometimes overly broad, proxy for his domicile, his permanent home. Both citizenship and domicile measure an individual\u27s permanent allegiance rather than his immediate physical presence. Because citizenship and domicile resemble each other, and because other nations often define residence for tax purposes as domicile, the U.S. system of citizenship-based taxation typically reaches the same results as the residence-based systems of these other nations, but reaches these results more efficiently by avoiding factually complex inquiries about domicile. In contrast, the traditional justification of U.S. citizenship-based taxation, the putative benefits of such citizenship, is not persuasive. In this context, three models of U.S. citizenship are relevant, namely, the minimalist model, the psychological model, and the Tiebout/purchase model. None of these models justifies the worldwide taxation of U.S. citizens on a benefits basis. Rather, such taxation is persuasive because of administrative considerations, i.e., the close resemblance of domicile and citizenship that makes the latter an administrable proxy for the former

ETI, Phone the Department of Labor: Economically Targeted Investments, IB 94-1 and the Reincarnation of Industrial Policy

In Interpretive Bulletin 94-1 (B 94-1), the Department of Labor defines economically targeted investments (ETIs) as investments which bear risk-adjusted, market rates of return and which also generate collateral economic benefits. lB 94-1 declares ETIs, so defined, to be consistent with the fiduciary provisions of the Employee Retirement Income Security Act of 1974 (ERISA). In his critique of lB 94-1, Professor Edward Zelinsky finds the ET1 concept unsound as a matter of policy and logic and incompatible with ERISA\u27s statutory standards governing pension trustees\u27 investment decisions. Professor Zelinsky views 1B 94-1 as resurrecting the discredited notion of industrial policy. He concludes that the DOL should withdraw IB 94-1 or that Congress should repeal it

The New Massachusetts Health Law: Preemption and Experimentation

The Employee Retirement Income Security Act of 1974 (ERISA) preempts major features of the new Massachusetts health law. Although regrettable, this conclusion is mandated by ERISA\u27s statutory terminology and the controlling case law. Other states, in fashioning their health care policies, are looking at elements of the new Massachusetts law. Just as ERISA preempts the individual and business contribution mandates of the Massachusetts statute, ERISA will preempt any similar provisions adopted by other states. Because state experimentation with health care is particularly desirable today, Congress should, at a minimum, amend ERISA to validate the new Massachusetts health law. More comprehensively, Congress should amend ERISA Section 514 to permit all states to experiment with health care reform insofar as such experiments relate to employer-provided health care. Ideally, Congress should repeal section 514 and thus abolish altogether the jurisprudence of ERISA preemption

Why the Buffett-Gates Giving Pledge Requires Limitation of the Estate Tax Charitable Deduction

The Buffett-Gates Giving Pledge, under which wealthy individuals promise to leave a majority of their assets to charity, is an admirable effort to encourage philanthropy. However, the Pledge requires us to confront the paradox that the federal estate tax charitable deduction is unlimited while the federal income tax charitable deduction is capped. If a Giving Pledger leaves his wealth to charity, the federal fisc loses significant revenue since the Pledger thereby avoids federal estate taxation as charitable bequests are deductible without limit for federal estate tax purposes. Despite its laudable qualities, the Giving Pledge is a systematic (albeit inadvertent) threat to the estate tax base. The Giving Pledge requires the amendment of the federal estate tax to restrict an estate’s charitable deduction to a percentage of the estate, just as the income tax charitable deduction is limited to a percentage of the taxpayer’s income. In this fashion, the sensible compromise embedded in the income tax charitable deduction would be carried over to the federal estate tax to simultaneously encourage charitable giving while ensuring that all large estates pay some federal estate tax. The Giving Pledge need not be the death knell of the estate tax. It should instead be the catalyst to reform the tax by limiting the estate tax charitable deduction

The Once and Future Property Tax: A Dialogue with My Younger Self

As I look back on my youth (expansively defined as the first 40 years of my life), everywhere I went, the local real property tax was perceived as both bad and doomed. If I could speak with the brash young law student/graduate student/alderman I once was, he would undoubtedly tell me, with great confidence, that by the beginning of the next century (which then seemed very far away) the property tax would no longer play a role in the system of local public finance. Alas, he was wrong. This essay explains why the young man I once was, confident of the imminent demise of the property tax, was wrong. This is thus a dialogue with my younger self for, as I look back, it is clear that much of the critique of the local property tax to which I (and others) adhered was overstated. As we enter the new century, the local property tax survives for many reasons; chief among these is that the tax has distinct theoretical and practical advantages. This is not to say that the standard local property tax is perfect or incapable of practical improvement; not everything I believed in my youth was wrong. But reality is indeed more complex than I and others thought: We overestimated the problems of the local property tax and underestimated the tax\u27s virtues. We did not foresee the extent to which modifications of the tax and alternative revenue sources for localities would prove to be, not initial steps toward the abolition of the local property tax, but, rather, ameliorative reforms which would enable the real property tax to survive. We similarly underappreciated the need for robust local government to possess its own tax base and how well-adapted the local property tax is for financing genuinely local expenditures. We subscribed to overly-idealized notions of sales and income tax bases, forcing (in our minds, at least) the realities of the property tax into an inherently unwinnable competition with theoretically perfect alternatives for financing public services. The choices in the real world proved more difficult