Americanly Yours

Promoting Free Markets, Free Trade, and Freedom!

Response To Comment

August 19, 2009 By: Phred Category: Uncategorized

I received the following comment from my friend John who recently started medical school.  The comment was posted on my Not Doing Nothing About Health Care post.

“I totally disagree with # 2. There is no way to control the quality of medical education in every country around the world. This would also completely flood the market with medical practitioners and drastically reduce doctors salaries which I am totally against. I don’t think reducing medical practitioners salaries is the right way to go. Why would anyone do 9 years of med school and residency and be on call all hours of the night if they were making less than they are now?? And on that note, would you want a surgeon trained somewhere you’ve never heard of in Tanzania cutting into you.. even if he charges 1/5 the price of an American?”

Here is my response:


Thanks for the comment.

There is a very simple way to “control [for] the quality of medical education in every country around the world.”  This plan is completely workable if you force foreign doctors to take the same medical licensing exams that American doctors have to take.  This way, whether the doctor was from Canada, Tanzania, or somewhere Ive never heard of, he or she would have to be held to the same standards that all American doctors would.

As far as “drastically reduc[ing] doctors salaries,”  that wouldnt be the case either.  Remember, that part one of my plan would end all income taxes on doctors.  Given that the average doctor finds himself in the highest tax bracket, this would actually result in a massive increase in pay.  [Furthermore, it would save the doctor time, allowing him or her to relax or work more instead of having to figure out their taxes.]  When talking about reducing doctors’ pay, I think you are also forgetting the demand side of this equation.  The simple fact is that demand for medical care is rapidly rising.  A big part of this is because baby boomers are getting older and are requiring more care.  Allowing more doctors into America will result in better care for more Americans at a lower rate.  Yet, ending income taxes for doctors allows them to keep more money while charging less for services–a win-win situation.

Additionally, if we could ensure that doctors from foreign countries were held to the same standards as American trained doctors the cost of medical school might actually decrease.  Think about it–if you knew for a fact that medical schools in Asia, Europe, South America, or elsewhere were significantly cheaper, and you were able to go online and find the pass rates for student from these schools, you as an American might be more willing to attend one of these less expensive schools.

To sum up:  the goal is to increase supply without decreasing pay or quality.  That is why allowing foreign doctors into the country must be done while holding them accountable to the same medical standards as American trained doctors.  That is also why this must be accompanied by an end to taxes for doctors.

Americanly Yours,

Phred Barnet

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Not Doing Nothing About Health Care

August 17, 2009 By: Phred Category: Uncategorized

“We have to do something!”

This cry is sounded repeatedly by those who are demanding some type of health care reform from President Obama.

Its hard to argue with their logic.  After all, health care costs are soaring and [according to some] there are nearly 50 million Americans lacking health insurance (although they are not without health care itself). Insurance premiums are rising faster than income, and Medicare will run out of money in 2019, potentially leaving millions of retirees without coverage, or causing taxes or government borrowing to rise rapidly.

I agree that something needs to be done.  However, I disagree about what exactly should be done.  Even the proponents of the Congressional plan agree that it is far from perfect, but they continue to repeat the mantra that “we have to do something.”

Well, we do have to do something, right?

The American people arent so sure.  According to a new Rasmussen poll, 54% of American voters–a larger majority than the percentage of Americans who voted for President Obama–believe that passing no health care reform would be a better option than passing the plan currently before Congress.  Only 35% say that the current bill would be better than “doing nothing.”

And it is now being reported that the President has dropped his demand for a “public option.”  If this is true, it could leave behind an expensive bill that does little to change the current system.

This plan is being pushed through Congress at a rapid pace.  President Obama has set artificial deadlines for when he wants legislation on his desk, yet health care reform is a massively complex issue that a new administration shouldnt reasonably expect to tackle in such a short time.  How this Nation to decide on a complex long term health care reform plan in only a matter of weeks?

I am one of the 54% of American voters who prefers “doing nothing” over passing the current plan.  However, that doesnt mean I favor doing nothing in general.  Here are some of my ideas for health care reform:

1)  End (or significantly reduce) income taxes for individuals working as medical doctors, nurses, medical practitioners, etc.

Doing this could dramatically lower the costs of medical care.  Ending or cutting income taxes for medical workers will essentially allow them to earn the same amount of money for charging less for their services.  This would also encourage those considering becoming nurses or medical staff to return to school and become certified in their fields, as well as encourage older medical workers to work for several more years (if they are able to keep more of their earnings, they could be more willing to work longer).  While this could add to the National debt if spending is not cut, the Nation would save a considerable amount of money in added health care costs.  And of course, I would support this plan only if it included spending cuts to balance out the lost revenues.

2)  End (or significantly reduce) immigration restrictions for individuals working as medical doctors, nurses, medical practitioners, etc.

Ultimately, costs in any industry, including health care, are dependent on supply and demand.  Any doctor, nurse, x-ray technician, etc. who is able to speak English should be offered instant American citizenship.  There are large numbers of such people all over the world who are interested in becoming American citizens, but who are unable to do so because of current immigration laws.

3)  Allow insurance companies to sell plans across State lines.

Federal law currently prevents insurance companies from selling plans across State lines.  This is just plain illogical.  This leads to inefficiencies and increased costs for both the business and the consumer.  Imagine if cell phone companies had to comply with similar restrictions–a company like Verizon would be prevented from having a National plan, they would have to have a different plan and pricing scheme for each State and D.C, and the cell phone user’s costs would be higher as a result.  The same is true for health insurance.  Allowing insurance companies to sell plans across State lines would essentially create a National insurance market where customers could go online to a site like and select a plan from companies headquartered anywhere in the Nation.  Taking this step would also allow insurance companies to cut unnecessary staff–potentially passing savings on to consumers.  There is no reason for a company like Blue Cross to have to have 51 different organizations to create and price different insurance plans.

Remember that just because we “have to do something” does not mean that we should have to do “anything.”  There are good as well as bad reforms, just as there are good and bad treatments for any disease.  A doctor with a seriously ill patient should look at all the options and diagnose the patient carefully and as accurately as possible before treating the patient.  Treating the patient before diagnosing him and reviewing all of the options could be catastrophic.

Americanly Yours,

Phred Barnet

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More On Income Taxes

April 20, 2009 By: Phred Category: Uncategorized

I got quite a lot of comments on last weeks article on income taxes.  It may have even gotten me banned from Facebook.  I stand by my views, including the view that income taxes (especially when used for redistributive social programs) represent a form of slavery.

I am going to try and answer the questions posed by my readers below, with the exception of Young Conservative’s question on the definitions of morality.  This will have to be saved for a separate article.

Yes, Kristen, I was tossed off of Facebook.  I hope to be back soon.  In the meantime, dont forget to click the “share” button to help me out.

Jeffrey Bowman asked if I would favor a consumption tax like the FairTax.  Yes, I would.  I believe that taxation is a necessary evil, but that it is necessary.  As I said in my article, I am not an anarchist.  I believe that a limited government is necessary to protect the rights of its citizens.  In order to fund the government, taxes of some form must be levied.

I prefer the FairTax because it essentially makes taxation voluntary.  Under the FairTax, every family in the country would be sent a check at the start of every month for the amount of money that their family would spend on taxes if they lived at the poverty line.  Additionally, used goods (ie, used cars and used clothing) would not be taxed.  Every individual would essentially pay the taxes that they wanted.

Wealthy individuals would be encouraged to save and invest, as savings and investment would no longer be subjected to taxation.

Under this system, even illegal forms of business could benefit the economy, as drug dealers and other criminals would be able to put their money into bank accounts, rather than under their mattresses.

Businesses would no longer have to match contributions to social security and medicare.  These programs would be funded through consumer spending.

In fact, the abolition of corporate income taxes could lead to foreign companies relocating to America.

American workers industry would benefit as well.  Because the employers would no longer have to match employee contributions, and because they would no longer have to pay corporate income taxes, American made goods could be sold to foreign consumers at a cheaper–and more competitive price.

Several years ago I read an amazing book on the FairTax called .  Check it out.  It breaks down the FairTax and tells of its effects on every group in society, as well as the effects on many different types of industries.  It answers questions and concerns on the tax that you may have.

Hawk–I wrote about property taxes here.  If that doesnt answer your questions, lemme know.  Yes, a tax on consumption would decrease consumption.  However, the increased income due to larger paychecks and the monthly “prebate” could offset this drop in consumption.  Additionally, greater profit margins for businesses inevitably leads to entry of new firms into business, which in turn leads to lower prices, thereby giving another incentive to consume.

However, maybe consumption should drop.  After all, the typical American family is deeply in debt.  Furthermore, many of the consumer goods that Americans buy with debt are purchased from foreign nations, leading to an increase in our negative trade balance (trade deficit).  I dont think it would be the worst thing in the world if consumption did drop, however, I still think that it would not do so due to the facts that I mentioned above.

The argument that CPA’s would lose their jobs doesnt bother me.  So what?  Let them use their financial skills to find work in other areas.  We shouldnt have to live with an unjust and complicated tax system just to keep CPA’s employed–at the expense of the rest of society.  Just as we shouldnt forgo sentencing reform to keep prison guards employed.  In fact foregoing either tax reform or sentencing reform will keep many people employed, but it does so while keeping others in chains.

I had another thought on the nature of income taxes in this nation.  A [so called] progressive income tax is a violation of the 14th Amendment to our Constitution.  Section 1 of this Amendment states that the government may not “deny to any person within its jurisdiction the equal protection of the laws.”  This doesnt just apply to giving preferential or discriminatory treatment to people of different races or religions.  The Amendment prevents denying equal protection of the laws to all people.  This includes the rich as well as the poor.

Hawk, you are right that a debate is needed on taxes at this point.  This is exactly why FairTax supporters are proposing a Constitutional Amendment to repeal the 16th Amendment and allow for a tax on consumption.  The Constitutional Amendment process is a long and cumbersome one which would force this proposed change to be debated in the halls of Congress, the halls of State Legislatures, and most importantly among the citizenry itself.

Americanly Yours,

Phred Barnet

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Why Income Tax Rates Should Be Lower

April 13, 2009 By: Phred Category: Uncategorized

[I wrote this article earlier and WordPress messed up and deleted most of it.  I had to rewrite the final 2/3 of this article.  I think I wrote it better the first time, but enjoy.]

I am not going to get into the philosophical reasons why I am opposed to income taxes in this piece article.  I am however going to explain why lower tax rates are better than higher tax rates.

Here is a chart that was sent to me by Mike at The Young Conservative Blog.  It shows the highest federal individual income tax rate.  It also shows the tax receipts received by the federal government as a percentage of GDP.


[Check out Mike’s blog, theres a lot of interesting stuff there.  Also, here is a Wall Street Journal article about Hauser’s Law.

I think this is pretty remarkable.  While the highest individual income tax rates in this country dropped from 91% down to 28%, and then rose back up to the current 35%, tax receipts as a percentage of GDP has remained at a fairly stable level of 19.5%.  Cutting the rates from 91% to 70% in a few years didnt really affect the receipt rate, nor did increasing them from 28% to 40% in a few years.

Now, you might say that the reason that the tax receipts as a percentage of GDP remain pretty much the same is that when taxes on the rich are cut, the tax burden falls more heavily on the poor.  However, you may recall the chart that I posted regarding tax burden.  I was able to find an acrhived copy of the chart that the government removed from its website here.  I dont know how long it will stay up.

This chart clearly shows that the rich have paid an increasing portion of the total income taxes collected since 1979.

In 1979, the top income tax rate was 70%.  The government collected about 19.5% of GDP through income taxes, and the top 20% of wage earners paid 64.9% of all income taxes.  The top 40% of wage earners combined paid 85.1% of all income taxes.

In 2005, the last year for which data is available, the top tax rate was 35%.  The government still collected about 19.5% of GDP through income taxes, however, the top 20% of wage earners now paid 86.3% of all income taxes (a higher percentage than was paid by the top 40% of wage earners in 1979), and the top 40% of wage earners paid 99.4% of all income taxes collected.

I know this seems counterintuitive, but cutting taxes on the rich–and all Americans–actually increased the tax burden on the rich.  2005’s top tax rate (35%) was exactly half of what the top tax rate was in 1979 (70%).  Yet, the rich paid a much higher percentage of income taxes in 2005 under a lower tax rate than they did in 1979 under a higher rate.

As I mentioned in a previous post, I found this spreadsheet when I was trying to prove to someone that President Bush’s tax cuts favored the rich and hurt the poor.  I was wrong.  In 2000, the top 20% of earners paid 81.2%of all income taxes.  By 2005, this proportion had grown to 86.3% of all income taxes.  The tax burden of the top 40% increased from 94.7% in 2000 to 99.4% in 2005.  In fact, every quintile in the “bottom 80%” of wage earners paid a smaller proportion of the total income taxes in 2005 than they did in 2000.  Broad based tax cuts benefit all wage earners.

Cutting taxes allows Americans to keep more of their hard earned money.  This in turn leads to increased spending, savings, and investment.  These three factors lead directly to increased GDP growth.  Increased GDP growth means higher tax revenue for the government (which will always collect around 19.5% of GDP through income taxes).

I have already demonstrated that the government will collect roughly the same percentage of GDP–19.5%–through income taxes no matter what the top tax rate is.  This is true whether that rate is 92% or 28%.  I have also demonstrated that cutting taxes on the rich and all Americans has actually increased the tax burden on the rich.  Finally, I have explained that cutting taxes leads to higher GDP (which equals higher tax receipts).

I see no further arguments against cutting taxes on all Americans including the wealthy.

Rather than raising the tax rates on the wealthy back to what they were in 2000, the President and Congress should consider drastically cutting income taxes for all Americans.  This will lead to increased economic growth which will in turn lead to higher tax revenues for the government.  Most importantly, doing this would allow all Americans to keep more of their hard earned money.

Americanly Yours,

Phred Barnet

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