The Power of a Penny

If you had a choice of receiving a million dollars right now or the sum of a penny doubled every day for thirty days, which would you choose? If you said a million dollars, you’re missing out—to the tune of about $9.7 million dollars. It’s not about the value of the individual unit of currency, but about how that currency compounds over time to achieve astonishing value. When it comes to our healthcare system, how can we make this concept work? 

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The Two-Cents Federal Sales Tax Healthcare Bill

Code: Red, White, and Blue proposes a new two-cent tax on every dollar spent on nonessential goods and services in the United States to pay for a single-payer healthcare system that would eliminate insurance companies and hassles for healthcare providers trying to provide the highest standard of care for their patients. This tax would apply to luxuries and other non-essential items, including fast food, leisure transportation, private boats and aircraft, tobacco, and alcohol. Because almost everyone purchases one or more of these items, this tax would cover everyone—including tourists, nonresidents, and green card holders, for whom the current system does not account. At the end of the tax year, if an individual wanted to pay more money for our healthcare system, this donation would be rewarded with a dollar-for-dollar tax credit and write off, incentivizing those with higher incomes—including corporations and big businesses—to pay more. Insurance companies will still be able to function by focusing on other industries, such as homes and cars. In fact, this used to be standard practice before President Nixon signed the Health Maintenance Organization bill in 1973. Ultimately, no more health insurance means no more sky-high premiums, which in turn means lower overhead costs for corporations and more money in your pocket.  

 

Doing the Math 

A two-cent tax on essential goods isn’t enough. Steve Kattell, owner and manager of Kattell and Company, a certified public accounting firm, did the math for us. In 2015, the Bureau of Labor Statistics’ annual Consumer Expenditure Survey found that the average American spends $140 a day on essential goods—food and shelter. $140 a day times 2% is $2.80—multiply that by the number of citizens, and you get about $914 million dollars of sales tax collected nationally. $915 million times 365 days in a year means that we collect approximately $334 billion a year—just 9% of the $3.8 trillion needed to cover healthcare. 

 

Doing the math backwards, you would need a sales tax of 23% across all states on essential goods to make enough to cover healthcare—about $32 per citizen per day. But what if instead of a sky-high sales tax, you could draw that revenue from another source? After reviewing how many American spend on driving, smoking, drinking, flying, and recreational boating (figures you’ll find in Code: Red, White, and Blue), it’s easier to see how achievable that extra $32 a day really is. 

 

Currently, only 0.05% of sales tax goes to health and welfare. With the Two-Cents Federal Sales Tax Healthcare Bill, 100% of these proceeds would go directly to funding a single-payer system that works.