Guest Contributor Dr. Carol Blackard: Letter to Polis and Markey

Response to Rep's Polis and Markey's letter of opposition to House Health Care Reform bill
Sunday, July 19 , 2009

Representative Jared Polis Representative Betsy Markey

Dear Representatives Polis and Markey:

This is a response to your letter of July 16, 2009 to Speaker Pelosi opposing the financing provision of the HR 3200, America's Affordable Choices Act.

Although your contention that persons with incomes over $500,000 may well experience tax rates of 45% as new health care taxes are introduced is technically correct,your claim that small business owners are singled out unfairly is untrue. Large corporate investors also face changes in the tax code in 2010 as the 15% qualified dividend tax expires and reverts back to the previous higher tax rate. It is also important to point out that S Corporation filings have been benefiting small business owners for decades by allowing them to avoid having earnings taxed first at the business level and then again at the personal income level. Large corporate dealings have never had this shelter and their earnings are taxed at both the business and then again at the personal level. After the Bush tax cuts sunset in 2010, it is expected that dividends will once again be subject toan individualincome tax rate as high as 39%. So,owners of a C corporation will end up paying a combined tax of approximately 60% (35% + (39% * .65 after tax dividend distribution) versus the maximum of45% tax for an S corporation. This doesn't seem so unfair to us.

We also question your assumption that small business owners would be unable to save enough capital to buy large equipment and other assets if such legislation is enacted. Businesses thatcan show a consistent profitability of $250-300K per year, should have no difficulty obtaining a line of credit from a bank to finance all or a portion of a large piece of equipment. Even without a line of credit, large equipment sellers can nearly always secure financing for strong businesses with healthy earnings histories. In fact, it is generally a poor business practice to always pay cash for large capital expenditures. As a successful businessman, you know that there is a benefit to having some leverage in one's business, so "saving up" for a purchase is not a common occurrence in the real world.

When you ask for the financing burden to be "collected from a larger base," we assume you mean that more people should be taxed. If you oppose taxes on those with high incomes, we must assume you favor a tax increase for the middle class. When difficult decisions about financing must be made, we expect you as representatives of your constituencies to remember that the middle class has been slammed for the past eight years in favor of all higher income groups, no matter what IRS form they use. Do we really need to remind you that during the Bush administration, the income groups over $250,000 were treated to huge tax cuts while the middle class suffered escalating health care costs and lack of basic human rights regarding their health? It is time for the higher income groups to contribute a bigger share to the communal good. Otherwise, the economy will not have the middle class underpinning that it requires. Even businesses must understand that it is in their own best interests. Please don't ask the middle class to pay again and again. We're broke.

One point you failed to address is what a great boon portable health care would be to small businesses. Once employees have a public option that can provide security and portability of health benefits, they will be free to move to small businesses, including innovative start-up businesses, and offer their expertise and newly-awakened creativity, instead of feeling trapped in jobs solely because of employer-based insurance. Small businesses will greatly benefit from these health care reforms.

Finally, representatives, we are disappointed in your apparent lack of empathy for and understanding of the desperate straits of the middle class. The health care reform bills before Congress at this time are a beacon of hope for those of us in the middle class. When we hear of our own democratic representatives trying to derail our hope, we are disillusioned and have to wonder what is going wrong in Washington, DC or in our electoral process. HR 3200 is a fine start at health care reform and should not be sabotaged by the very democrats that we should be able to count on to support it.

Sincerely, Carol Blackard, MD Todd Mata, JD, LL.M, CPA

PS - A response from Rep Polis on July 20 clarifies that he does not support taxing the middle class, nor does he seek to weaken the current House bill. He does strongly support it, but has applied substantial pressure on the Speaker and others to change the financing mechanism based on his special concern for small businesses filing tax returns where personal and business income are combined. He prefers taxing wealthy Medicare beneficiaries, or perhaps increasing capital gains taxation or adding to large corporation taxation, and wants the surcharge changed to start at $1,000,000 instead of $350,000. It's too bad Rep Polis could not have taken a more supportive stance for HR 3200 from the beginning. Voting against this solid attempt at health care reform in committee was a power play we cannot support, and sent a divisive message that in our opinion was unnecessary and, in fact, harmful to the effort to achieve health care reform which is already beset by opposition from conservatives on both sides of the aisle.

Dr. Blackard's addendum after a telephone conversation with Rep. Polis Monday night: Voting against HR3200, America's Affordable Health Choices Act was an unfortunate expression to say the least. Small business persons making >$350,000 per year, having to pay an additional $500 or $1500 per year - are you kidding me, representatives? That's your reason to oppose this promising bill? I suggest to you that this is a time for solidarity and leadership to support these efforts, not sabotage and power plays.

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The following letter was shared with me by Dr. Carol Blackard, a physician in Arapahoe County, who has studied health care reform options since working as a volunteer during the Obama campaign. She is an officer at Arapahope Community Team (ACT), a grassroots community action group, and has presented her analysis of the various health care reform options to numerous groups for the past 8 months. She wrote this letter after reading Rep. Jared Polis's letter written to House Speaker Nancy Pelosi. After a long telephone conversation with Representative Jared Polis Monday night, Dr. Blackard added the addendum.