Friday, July 10, 2009

Proposal on table to tax wealthy to pay for health care

The House Ways and Means Committee might propose a tax on high-income Americans to help fund an overhaul of the health care system. The surtax probably would be levied on earners who make more than $250,000 per year. Another proposal favored by Republicans would tax employer-provided health benefits. See full story here.

Curious how this reminds me of the story of an economics professor at Texas Tech that said he had never failed a single student before, but had once failed an entire class. That class had insisted that socialism worked--that it was a great equalizer. No one would be poor and no one would be rich.

The professor then said OK, we'll have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around the average was an F.

The scores never increased. Despite the bickering, blaming, and hard feelings, no one would study for the benefit of anyone else. To their great surprise, they all failed. The professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great; but when government takes all the reward away, few will try or want to succeed.

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