Congressman Pallone Thinks Dems Should Consider Taxing the Rich to Pay for Health Care

This is a rush transcript from "Your World With Neil Cavuto," July 7, 2009. This copy may not be in its final form and may be updated.

BRIAN SULLIVAN, GUEST HOST: Well, tax the wealthy, that is the new plan from some Democrats to pay for a national health insurance plan — Republican leaders warning, though, it will hurt small business and won't even come close to paying for the plan.

Democratic Congressman Frank Pallone says we still have got to consider it. He is from New Jersey. And he joins us now.

Congressman, welcome to the program. It's Brian Sullivan.

Are you in favor of this surtax...


SULLIVAN: ... on upper-income Americans to pay for health care?

Video: Watch the 'Your World' interview

PALLONE: Well, I haven't decided what's the best to pay for it, but I will say that we do need a combination of cuts in existing programs for providers, if you will, like, you know, hospitals and doctors and others, but also some new revenue from some sort of tax.

Now, this may not be the best, but it's certainly one that's on the table, and you're going to hear a lot of them over the next few weeks because when you're trying to pay for a trillion dollar plan, you have to have combination of new revenues, as well as — as cuts in existing programs.

SULLIVAN: Well, listen, you're from New Jersey, and so a lot of our viewers maybe have never been to the fine Garden State. But I'm going to show a couple of facts about the state of New Jersey because I think it's relevant to the vote that you may have on this bill.

New Jersey has the highest property taxes in America. Now, the good news is that the median income, as you know, is 30 percent more than the national average. The bad news, Congressman, is that the median home price is 42 percent more than the national average, so you spend more of your income on a home. You've got the highest property taxes, and now the second-highest top in-state income tax rate and the third-longest work commute. That's all coming from the Census Bureau.

I know there's this fascination with big round numbers...

PALLONE: Right. But you have to keep in mind that...

SULLIVAN: ... but why not — OK, if you're going to go after the wealthy, people in your state who may not consider themselves wealthy, but, you know, compared to somebody in Iowa, they might be, what's this fascination?

PALLONE: Well, I think, again, I have to stress — I have to stress, Brian, that, you know, you're going to have to pay for this somehow. You can pay for it with some kind of combination in cuts in existing programs, but you're going to also have to have a new source of revenue. And there are a myriad of ideas out there, and where we actually land is not clear.

But I think it is important that you're pointing out that there is going to have to be a new source of revenue or tax in some fashion. If we think that there isn't going to be, we're kidding ourselves. And the question is, what is it going to be and how is it going to be the fairest? And what are the strategic goals?

SULLIVAN: Well, but, clearly, the people in your state are doing more than their fair share because they have got to spend more money on housing than anybody else. They have to spend more on state income tax.

PALLONE: Well, this will be across — this will be across the board, though. It won't just be for New Jersey.

SULLIVAN: Well, let me — I will put out — how about this proposal. I will call it the Sullivan proposal. I have argued for it on FOX Business Network, which is where my regular show is.

Instead of going after the round numbers — right? — which, you know, one income in one state may not equal another income in a different state — any way to do it on a — and I don't want any higher taxes — but if you're going to do it, any way to do it on a cost-of-living index? So instead of sticking it to people who are already doing way more than their fair share and who probably leave the state of New Jersey, why not do it on a cost-of-living index? So if you make 200 percent more than the average...

PALLONE: Well, I mean, there are all kinds of things.

SULLIVAN: ... income in any given state, maybe you're considered rich.

PALLONE: Well, there are all kinds of things out there. I mean, some have talked about a soda tax. Some have talked about, you know, trying to tax — I think the governor talked about deductions or reducing deductions on, you know, various things like charitable deductions, whatever.

I mean, we're looking at all these different things to see what's the best way to come up with an answer. But also we're looking at cuts in existing programs, you know, provider cuts and different things that will save money.

Keep in mind that in the long run, this health reform will save money, but you do need some money up front to pay for it initially. So that's why we're looking at all these options.

SULLIVAN: OK. Go to the CDC's Web site and — and click on obesity map and you can look at the growth in obesity. Our obesity rates in America have doubled in the last decade or so.

PALLONE: Well, I think that's a good idea.

SULLIVAN: According to the Milken Institute, obesity costs this nation more than $1 trillion a year in lost productivity, disease, problems and treatment. Why not start placing more responsibility on individuals to keep themselves healthy, as opposed to just trying to pay for all the problems after they exist?

PALLONE: Well, we are actually — we are actually looking at preventive care and wellness and those kinds of initiatives, and I wouldn't rule that out either. In fact, I think you're right in saying that that's something to look at.

All I'm trying to stress, Brian, is that this is going to be paid for. We're not just going to put it in debt and say, you know, for future generations to pay for it. We want to pay for it in some way. Looking at preventive care, looking at cuts in existing programs — all these things are on the table. And you're right to bring it up and, you know, to raise it because I think it's important for people to know that it does have to be paid for. It's not — it's not free.

SULLIVAN: Congressman Frank Pallone of New Jersey — Congressman, thank you very much.

PALLONE: Thank you, Brian.

SULLIVAN: All right.

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