Governor's No-Tax Rhetoric Hits a Snag With New State Health Plan

    In a Nov. 26 interview with NBC’s “”Meet the Press”” host Tim Russert, the freshly re-elected Gov. Arnold Schwarzenegger reiterated what had become a staple of his campaign promises: staunch opposition to raising new taxes. He pointed to a $20 billion increase in state revenues, arguing that stimulating the economy – and not new taxes – was the way to pull California through a time of lean budgets.

    On Monday, Schwarzenegger proposed a statewide health care plan that would require all Californians to obtain medical insurance. The $12 billion program would provide aid to those who are unable to afford health insurance. But to pay for the program – ostensibly without raising taxes – the governor may need to rely heavily on semantics, a guileful ruse that may sink the whole plan.

    One of the key funding mechanisms in the health plan would require companies with 10 employees or more to offer their employers insurance or pay a “”fee”” equal to 4 percent of their payroll, which would raise an estimated $1 billion for the state. Another would levy a 2 percent “”fee”” on doctors’ gross profits.

    Schwarzenegger may have an interesting time convincing the legislature – and California businesses – that these “”fees”” are anything but taxes by another name.

    Jon Coupal, president of the Howard Jarvis Taxpayers Association, told the Los Angeles Times, “”It is a government exaction that is not voluntary; the consequences of not paying it are substantial penalties. How is that not a tax?””

    Administration officials contend that the issue should be seen in the larger context of health care costs: The cost of treating uninsured patients is currently picked up by the state, which costs each Californian families well over $1,000 by some administration estimates. The 4 percent payroll fee is not a new tax, the administration argues, but simply a redistribution of costs from family taxpayers to businesses that do not provide health coverage for their employees.

    But it’s a dubious argument, considering how the “”fee”” finagling may be interpreted. For one, even the least cynical pundits can’t help but recall Schwarzenegger’s last gubernatorial campaign, during which he routinely blasted Democratic challenger Phil Angelides’ stated plans to raise new taxes.

    And the legal ramifications are even more significant. New taxes must be approved by a two-thirds majority of the state Legislature, while “”fees”” require only a simple majority. Schwarzenegger’s classification of the levies as fees may be interpreted as a back-door attempt to circumvent a two-thirds vote, which would require support from at least a few Republicans, who have generally reacted to the bill with displeasure.

    Schwarzenegger’s health plan is a good one, and should save the state billions over time as the poorest California citizens get the preventive care they need. But for the program to get off the ground, the governor will need the support of state legislators and their finicky constituencies. Already, labor leaders have attacked parts of the plan, arguing that many companies will simply abandon their existing health care packages and simply pay the 4 percent tax. Nurses’ unions have complained that the plan does little to reel in skyrocketing premiums.

    Facing these criticisms, the disdain of a number of Republicans who view the health plan as a wasteful entitlement program and a potential legal battle over whether the new fees are in fact taxes, the governor needs all the help he can get. The semantics-driven argument that he is not raising new taxes will erode the newly rosy image Californians have of the Governator, and conjure visions of the unpopular Arnold of 2004, the willful governor who tried to push his proposals through only to see all of them go down in flames.

    If Schwarzenegger wants California’s support for his health plan, he should swallow his pride and call his proposed taxes what they are – and then carefully explain how they are likely to be counterbalanced by state savings elsewhere.

    You can call an apple an orange, but it doesn’t make it so. And Californians can tell the difference.

    More to Discover
    Donate to The UCSD Guardian
    $200
    $500
    Contributed
    Our Goal

    Your donation will support the student journalists at University of California, San Diego. Your contribution will allow us to purchase equipment, keep printing our papers, and cover our annual website hosting costs.

    Donate to The UCSD Guardian
    $200
    $500
    Contributed
    Our Goal