Paying for healthcare by taxing the rich

I was thinking a bit about the proposal to pay for the new healthcare bill by "taxing the rich". The biggest problem with this scheme is that the rich have volatile income.

When you have to pay for a thing every year, without fail, you usually don't depend on a volatile revenue source.

Recently, Schwarzenegger vowed to fix the "boom-bust" cycle in California by spreading state taxes more evenly across income brackets. This proposal is a very conservative way to prevent volatile tax revenues. Unemployment hasn't historically risen above 10% for very long, and incomes for most people are pretty flat, so a scheme that depends less on a Tech Bubble and a Housing Bubble to meet its budgets is definitely a good step.

But the Obama healthcare proposal is the opposite. We intend to pay for healthcare using tax revenues that are extremely volatile.

To fix this (rather than going as far as Schwarzenegger's plan), maybe we should develop a spending policy based on a 10-to-15 year moving average of tax revenues, with some hedging to avoid over-committing during good times, and falling short during bad ones.

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