Thread by @Brian_Riedl

THREAD: My new Daily Beast op-ed analyzes Sen. Warren’s new Medicare-For-All plan. There is a 24-hour paywall, so in the meantime I summarize my article below. 1/ thedailybeast.com/the-magical-th…

Warren is expanding coverage by $7 trillion over the decade, and (by my math) she requires that national health expenditures come in about $9.5 trillion below baseline. So she needs $16.5 trillion in provider cuts and efficiencies. Totally implausible. 2/

The calcs:
$52 trillion 10-year NHE baseline
+$7 trillion new coverage
- $16 trillion current federal spending applied to M4A
- $6 trillion state/local spending applied to M4A
- $20.5 trillion new budget savings
= $16.5 trillion in needed health savings. 3/

Btw, much of that $16 trillion in current federal spending is not funded either – its escalating deficit spending. Overall, Medicare already faces a $44 trillion shortfall over 30 years. Warren does nothing about that. Maybe pay for existing Medicare before expanding it? 4/

In trying to shield middle-class, we get a 35% corp rate – highest in OECD – worldwide no deferral.

So in England, the US subsidiary pays 35% rate, while nearly all other countries’ subsidiaries pay just the English 19% rate.

Expect more companies to leave U.S. 5/

And don’t forget a corporate surtax of up to 7% from her previous “Real Corporate Profits Tax” 6/ taxfoundation.org/elizabeth-warr…

Huge new taxes on business investment, which will hurt workers. Also tax cap gains at 43.4%, including the inflation gains. This exceeds revenue-maximizing level. Mark-to-market means IRS subsidizes rich investors in years when the market falls. Huge tax revenue fluctuations. 7/

6% wealth tax rate is such a global outlier that its not even serious. And Larry Summers has estimated that earlier wealth tax proposals will raise around 1/7 of promised revenues. 8/

Combination of 35% corporate rate (worldwide, no deferral), “Real corporate profits tax,” curtail depreciation, huge capital gains taxes, financial transactions tax, bank tax, and 6% wealth tax is economic fantasyland. Taxes on capital would be through the roof. 9/

Its challenging enough to do a few of those capital taxes. Combining all of them is not even remotely serious. The capital flight would be real, the burden would be harsh, and the promised revenues would go with them. 10/

Yes, these taxes would be passed on to workers and consumers. Even if Sen. Warren claims she is shielding the middle class. This isn’t all coming out of mansions, yachts, and caviar. 11/

Closing the tax gap is good, but $2.3 trillion is not realistic. $400 billion immigration revenues is politically unlikely, and cutting defense to 2.7% of GDP – lowest since the 1930s – at least requires a real plan. 12/

Business will be payroll-taxed at 98% of what they were already paying in employee health benefits for the past 3 years. So generous companies get locked in to higher taxes (at least until the rate eventually standardizes). 13/

If I am a business owner, should I quickly make my health plan less generous, in hopes that by the time M4A is enacted, my 3-year average health payment (and thus my M4A tax burden) is smaller? 14/

A CBO/JCT score would likely show a massive funding shortfall – far into the trillions – at which point the dreaded middle-class hit comes. And that’s before Congress scales back the most destructive policies. 15/

To sum up, I thank Sen. Warren for having the courage to produce a plan and move the debate. Although the assumptions are highly questionable, and the plan is not remotely close to anything Congress could -- or should – enact. 16/F