Our Two Most Onerous Taxes: College Tuition And Healthcare Insurance

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

It is not coincidence that these two unofficial taxes--healthcare and college tuition--are soaring in cost, outpacing all other household expenses.

I have long argued that to make an apples-to-apples comparison of real tax rates in the U.S. and other equivalently developed advanced democracies, we have to include two enormous expenses that are funded by the central state in countries such as Denmark and France: healthcare and college tuition/fees.

In The Real-World Middle Class Tax Rate: 75% (July 5, 2012), I estimated that healthcare insurance (if paid out of gross income, as we self-employed workers do) in the U.S. is roughly equivalent to a 15% tax.

Now that the Orwellian-named Affordable Care Act (ACA) is raising costs and deductibles, the true cost of healthcare (a.k.a. sickcare, because being chronically sick is so darned profitable for the cartels) is more like 20% in America.

Correspondent Tim L. (whose daughter is attending a prestigious STEM--science, technology, engineering, math--university) recently called $40-$50,000 per year college tuition what it really is: a tax:

College tuition is just another tax. If you can afford to pay it, you have to. If you cannot, you do not. Anytime you have to pay more for something because you can, you are paying a tax. Between traditional taxes, the college tuition tax, and the health insurance tax (also paid only by those who can afford to), I figure this year and the next three I'm in a 100+% tax bracket.

Middle-class Scandinavians famously pay around 65% to 75% of their gross incomes in taxes, but these taxes fund national healthcare for all and nearly free college tuition and fees. Add $200,000 (four years of tuition/fees at $50,000/year) in tax to the already-high U.S. real tax rate, and the real tax rate for middle-class households exceeds 100% of gross income.

Since only those with significant savings can possibly afford to pay a $200,000 tuition tax, the average-income household is left with one choice: the debt-serfdom of student loans. This is the acme of a morally bankrupt system of higher education: you need a college degree to have any hope of succeeding in America, but the only way to get that degree is to enter debt servitude, with no guarantees of future income needed to pay off the debt.

It is not coincidence that these two unofficial taxes--healthcare and college tuition--are soaring in cost, outpacing all other household expenses. The only other household item that is skyrocketing is debt:

The two unofficial taxes--paid by debt, either student loans, or Federal deficits-- have no restraints: if you can't pay, then the upper-middle class taxpayers who are paying most of the Federal tax will, one way or another:

Meanwhile, guess what's been flat to down for the past 40 years--yup, the earned income of the bottom 90%:

With an unofficial tax rate for healthcare and college tuition that makes Scandinavian countries look like low-tax havens, no wonder the middle class in America is vanishing like mist in Death Valley. The political class is now bleating about the erosion of the middle class and rising wealth inequality. There are two primary sources of rising inequality in America: the Federal Reserve and the higher-education and healthcare cartels that so generously fund the campaigns of the bleating politicos.

Want to Reduce Income/Wealth Inequality? Abolish the Engine of Inequality, the Federal Reserve (January 28, 2014)

Healthcare "Reform": the State and Plutocracy Stripmine the Middle Class (Again)(November 9, 2009)

Higher education needn't be a bloated, ineffective, obsolete, morally bankrupt cartel: we could have a Nearly Free University system that is available to all.

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NoDebt's picture

Fortunately you can avoid both by not purchasing them.  Oh wait....  

Ok, you can avoid ONE of them.  And even that one's starting to look a little sketchy (student loan bail-out coming up, then we ALL pay).

Troll Magnet's picture

Property tax should be banned. THAT is the biggest bullshit tax IMO.

Pumpkin's picture

Property taxes are a material burden that alienates the right of property, when they are placed upon the property of the people.  The legislatures have made this alienation lawful, but only because the statutes are written to apply only to those entities that do not possess inalienable rights.  Your state constitution declares that the people have inalienable rights, and this declaration is in the very first Article.  The rest of the constitution and the powers given to government must be predicated upon this fact.  Learn the law.

kchrisc's picture

Summary: If you have to pay to keep it, you don't own it.


"Sever our Liberty, sever their heads."

lunaticfringe's picture

Preachy bastard. Not entirely true or simple either. Learn restraint.

Eeyores Enigma's picture

How about the fact that if you want to buy what should be a $250,000 house after interest, insurance, inflated prices due to finance bubbles, monetary inflation, and property tax you will pay north of a million dollars for that house.

Think of what kind of economy we could have had if we had just killed all the banksters, real estate brokers, financial managers, insurance people, oh yeah and lawyers.

One can always dream!


zaphod's picture

College education at top schools has traditionally only been for the upper class. The past 60 years has been a slight deviation from that.

People who see themselves as in the middle class are not really middle class, just slightly better off than those in the lower class. But Obama's vision for America is going to teach them very clearly that they are not middle class. Not being able to afford an education for  your children is just the first leason.

dark pools of soros's picture

but they dont realize it until after they get the bill..  they just see they can't get a good job handed to them so they go all in on college, kick the can, some win ... many lose


then they really know they aren't high class.. middle class.. and now no class since they sold their dignity into debt

Vampyroteuthis infernalis's picture

NO one forces you to attend a prestigious school of any kind. You can to go your local State U and get an adequate education for a lot less. "Dear god my child doesn't get the best. Boo hoo hoo." That moron complaining about send his daughter to an expensive private U should suffer.

zaphod's picture

I never said going to a prestigious school was either required or recommended. Only that for most of our history the classes were segregated by education and only upper class children attended "prestigious" schools (whatever prestigious means).

The simple fact is we are reverting to this model again, whether that is good or bad or indifferent is up to you.

Georgia_Boy's picture

The only reason to go to a top-drawer university for STEM is if you want a prestige niche ... I mean like a professor or a doctor or patent attorney or software startup billionaire. STEM is one of those fields like nursing where the engineer from a state school makes about the same as an engineer from a good private university ... not that much pay difference as long as you work hard and try to learn as much as you can on the job. So the extra money to go to a private university isn't worth it. Engineering was never supposed to be a glamour profession, which is why a lot of Ivies don't even have programs in it. Historically it was just a practical field where a smart kid from a poor family can get a degree and then rise up to a good upper middle class living. But now we've got all the usual central-planning buttinskies who have it in their heads that tech is the future of everything and the best field for anyone who's smart enough to do advanced math. As usual they don't learn from the past and think more spending on education always pays.

TheGardener's picture

In Europe university tuition is free for all, American poverty refugees welcome ! Locals are not only getting free tuition, they get paid (on interest free loans) to stay
out of the unemployment statistics with a generous monthly allowance. Education offered free is worth as free shit of course, but degrees count a lot in an entitlement socialist state of affairs.

Health insurance has monstrous proportions though, a low
paying job earning subsistence wage only costs a hefty premium that you would be happy to live on without cover or job.

Vampyroteuthis infernalis's picture

TG, this is true if you are an EU citizen. Foreigners (non-EU) need not apply.

Ghordius's picture

this depends from the country. they are, after all, national health services

TheGardener, what are you talking about? "Education offered free is worth as free shit of course, but degrees count a lot in an entitlement socialist state of affairs." I remember when Germany was losing some 100'000 freaking graduates per freaking year, who went to the US to get better, higher paid jobs

and found out that they were better qualified than most, then not all US universities hold the level of the top ones. and I'm counting graduates from behind the Iron Curtain, who have some of the best engineering schools ever made

TheGardener's picture

Last I heard Germany had her education system decimated by
letting herself being downgraded to globally accepted degrees such as master studies instead of former full study titles. But we seem to talk about different surplus graduates, I have social studies losers in mind that populate cities as Berlin one might visit and you dream about the engineering folks that still do have an edge, I admit.

And don`t get me started to what nourished behind the Iron

AGuy's picture

"In Europe university tuition is free for all,"

The current EU unemployment charts say that its not working. Youth unemployment is sky high in the EU.

One And Only's picture


The government is the main player in these two industries. It is efficient and productive beyond measure.

LawsofPhysics's picture

correct, things always get expensive when the government gets involved (one of the only reasons I can think of why WWIII hasn't started yet, must be just too damned expensive).


One And Only's picture

You are a terrorist.

The government does it better than freedom loving capitalistic pigs.

Emergency Ward's picture

Forced fascistic health insurance enables people to become artists according to Nancy Pelosi.

Ghordius's picture

main player? this would suggest that the US gov gives both education and health-care for free, in state hospitals and state universities. like the Scandinavian examples that CHS brings. to me, they look like private cartels with heavy gov involvement. I believe this is an important distinction, without getting into the merit of what ought to be the norm

i_call_you_my_base's picture

It is an important distinction. What's lost among many in the fight between what is left to the government and what is left to markets is that combining the two results in the third, worst outcome. You end up with the worst part of both government and private business.

New World Chaos's picture

Yup, good ol' Hegelian dialectic.  Thesis-antithesis-synthesis.  It's high up in the puppetmasters' bag of political tricks, right below divide and conquer, the boiled frog, and problem-reaction-solution (a.k.a. the false flag).  The dialectic is why the puppetmasters have to control both sides of every ideological struggle.  Then they get to design and control the institutions that emerge from the struggle, and it will be the worst of both worlds (for us).  See, for example, the Cold War, or the two party system.

chemystical's picture

"The dialectic is why the puppetmasters have to control both sides of every ideological struggle. "

Let the Hasbara faction weigh in with down arrows, but anyone with eyes wide open sees that one of the most omnipresent manifestations of that is the "good jew : bad jew" false dichotomy. 

Yes, most folks with a few synapses still firing independently of the conditioning have recognized the obvious false dichotomy in our "Left" and "Right" political representatives' "dialogue" but far too few recognize the Ziosatanicjew false dichotomy.  The same string pullers behind those "representatives".  The same ACLJew who annoint themselves (chosen people huh) the defenders of our civil liberties while their co-religionists lie, swindle, and steal or outright stomp on those liberties. 

NAACP a kosher affair from day one, People for the American Way ditto, Southern Poverty Law Center ditto, Womens' Liberation ditto, Hippie/Yippie ditto, LGBT rights ditto, and that list goes on and on as lazy intellects and bodies outsource their morals and ethos to the beguilling serpent.

Watch Sunday morning talking head shows or Women's Issues shows, for example, to see who is incredibly over-represented in telling you what you should think and why you should think it.  Often there's a co-religionist on the other side of the "debate".   The true issues are rarely discussed, and if they are then it's in a very controlled format to minimize or trivialize or make jokes about the those true issues or the inconvenient facts of the issues that are discussed.

LawsofPhysics's picture

Just more "uninflation".

Say it with me; "roll the motherfucking guillotines".

nothing changes otherwise.

zuuma's picture

I tend to agree about the guillotines.

Unfortuntely, the trouble with those & the "Robespierre" who runs them -- they never seem to stop at the right moment.

There are always new, deserving groups "discovered".

Turin Turambar's picture

Right now, I'm willing to risk it.  Sell it on PPV to offset equipment and labor costs.

Papasmurf's picture

There are no labor costs.  A line of volunteers has formed.

Rainman's picture

Choom Farming and Distribution Management ... the only course you must have to get rich quick . Tuition zero, all OJT !

Higher High Education .

Duc888's picture




Well, no.  The Slave tax (income tax) is the first most onerous tax, followed secondly by the property tax.

It's your property to "lease" from FEDGOV, until you stop paying tax on it.  Then it goes back to it's rightful owner, the State.

Third would be Oblablacare / tax.

The exorbitant cost of college is not a tax.  No one is making anyone go to college.

TheGardener's picture

Some contemporary French thinker said colleges and universities are not places of learning ; as he discovered being there, but places where conforming members of society
are being bred to reproduce such said society. Nail me on this and I will recall his name.

The exorbitant cost of college is indeed a tax, levied twice: once on those who wish to get by without working
and ruling over these that are supposed to pay for those
them superiors jobs.

madcows's picture

You forgot the biggest tax of all, Government Debt.  Washington borrows trillions a year to pay for all it's programs.  That's borrowed money to be paid by someone else.  IT's Money we OWE.  If the criminals actually had to pay the costs w/o borrowing it, we'd all be taxed at 200 percent.  it's criminal negligence.

Papasmurf's picture

actually had to pay the costs w/o borrowing it, we'd all be taxed at 200 percent. 

We all pay the tax you're talking about though inflation. 

adr's picture

I almost just want to go to the doctor just so I can get something for my money. I never get sick and every month I don't spend $1200 is free cash to the insurance company.

If it weren't for having a wife and kid, i wouldn't even have health insurance. But now that isn't an option since I am required to have insurance by law. The cheapest plan would cost me $450 a month and doesn't cover jack shit. Essentially the ACA is a forced minimum $5000 pay cut.

Emergency Ward's picture

So I'm preparing my tax return with TurboTax and I get to the part where it asks if members of my household have health insurance......

squid427's picture

Off topic question. Anyone know what happened to McMolotov? I loved reading that guy's comments.

Pumpkin's picture

One thing that is completely missed in tax discussion, the liability of the income tax is placed upon the employer (the source) and the federal agent in charge of recieving it from the employer.  There is never a liability placed directly upon the worker.  And this liablity only begins by the affirmation of the worker on the w-4 form.  This is how the income tax is not considered a direct tax.  All direct taxes still must apportioned by population.  Read the statutes and Brushaber.  This is fact.

teslaberry's picture

charles hugh smith is at times insightful. at other times, he really is a died in the wool idiot like yves smith. 'college education is a tax'. no . no you cannot be that stupid. a tax is a requirement you pay money to move money from one place to another place.  


education by its very definition is a form of consumption. if you paid a tax on education, it would show up like a sales tax does on your grocery store purchases for prepared foods. it does not. student loans are the oppostie of a tax on the consumer they are a subsidy!!! and they are paid for by tax payer backed guarantees of the state! and the profits are largely privatized.

 the fact that so many young people are taken in by this kind of specious reasoning and sloganeering , such as "free college for everyone!", is a testment to their poor critical thinking skills. I met many of these types acroos from my old office at zucotti park in the occupy protests.


Those 'kids'  have poor reasoning skills which they failed to develop in middle school and high school. if by the time you are 18 or older , and make a personal choice as an adult, you are of past the age where it is very unlikely you will learn the kind of critical thinking that is necessary ( not that much in my opinion) to see through this nonsense hot air being blown by charles hugh smith. fucking communists.


if mr smith wants to go down the long and convoluted road of exploring how loan creation guaranteed by the state to cover losses of private lenders  creations at large inflation of the cost of everything---including massive bubbles of overuspply overdemand, and overpriced college educations--at the expense of savers and wage earners---then you are free to do that. but that's a tax on everyone who isn't currently going to college!. and upon many people who have never gone ! and on many people who dropped out or never needed to go!.  

 you're not going to just require lenders lend infinite amounts of money for free, or require professors to teach for free upon state edict. no , communism really DOES NOT work the farther up the chain of needs you go. college education is WAY UP that chain. not everything can be free , nor guaranteed by the state. the private citizenry , no matter how poor, MUST be forced to pay for some things, and forced to earn their way up and learn their way up. building fake systems on the notion that the state guarantee every saftey and security in life , including a massive professional military to make the world 'safe' will only guarantee massive systemic collapse. it already is!


applelover's picture

well said.  i feel the same way.

chemystical's picture

The higher education racket in the USA is already bloated with dingus paperwork and paperpushers and snake oil peddlers.  If it were to actually become "free" per the models suggested, then the ensuing inefficiency would astonish us all as the adminstrators completely lose both the sight of and the incentive to watch the bottom line.

Just as central governments could lose half their departments without the people noticing, universities could do the same and with the same outcome.

And prithee explain why students need to spend $2000 or more per year on books that disclose no new equations or concepts or facts as compared to last year's or last decade's or last century's book.


steve2241's picture

Hope, and a guarantee.  Now, that's the ticket!

Inthemix96's picture

Very off topic folks but worthy of a mention.

You know that bloke the coppers shot in London march 2011, Mark Dugan?  Hes the bloke that on his death sparked the riots.

At the verdict a few weeks ago I had no idea until today the coppers had 1300 'Officers' on stand by for the result of the inquest.

1300?  Fully paid, and kept quite eh?

Tick tock bitchez


Jlasoon's picture

As an individual who has worked both in the United States and Canada in the health care industry I can assure you that both systems aren't created equal. Not even close. The average American cannot comprehend let alone fathom what socialised medicine really is. 


zuuma's picture

Does "socialised medicine" Match the awesomeness of Obummer's college transcripts?


Because...  Awesome!

reader2010's picture

The preNo servation of privilege requires the exercise of power, and those who exercise it cannot be too squeamish about the injuries that any ensuing conflict imposes on the losers. The people who founded American boarding schools during the time of the robber barons were far from innocent or naive about how the world worked, and deliberately chose heads who were adept at portraying the world in moral terms. The founders of the schools recognized that unless their sons and grandsons were willing to take up the struggle for the preservation of their class interests, privilege would slip from the hands of the elite and eventually power would pass to either a competing elite or to a rising underclass. Thus, the idea of taking boys, in particular, away from their mothers and placing them in barracks where their personal identities were stripped away begins to make sense. These boys were meant to become soldiers for their class and to become “combat ready.” They had to be made tough, loyal to each other, and ready to take command without self-doubt. Boarding schools were not founded to produce Hamlets, but Dukes of Wellington who could stand above the carnage with a clear head and an unflinching will to win. It was, after all, the Iron Duke who said that the Battle of Waterloo was won on the playing fields of Eton. McLachlan was on to something important when he saw a relationship between boarding schools and innocence; only he was off course, as it is the destruction of innocence that occurs in the status seminary, not its preservation. -Peter W. Cookson Jr and Caroline Hodges Persell, Preparing For Power, 1987

High college tuitions and expensive health insurance premiums and your retirement savings are all the pieces of the ruling ideology that is perfectly designed for social obedience training, so that the ruled can control themselves to perpetuate the privileges of the ruling elite.

teslaberry's picture

power would pass to either a competing elite . that is all. the world is a jungle. without effort entropy leads to the decay of all. 

reader2010's picture

When we think of power and the exercise of social control we are apt to think of a higher person or group imposing themselves on a lower person or group. We are less apt to think of how those in power must exercise social control over themselves and their children. Sacrifices must be made, and upper-class fathers, in particular, have been willing to sacrifice their sons’ inner lives for the sake of their class. The stripping away of the private self that is essential for the prep rite of passage is but the first step in a lifetime of personal denial and the denial of the person. Impersonal regulation becomes a substitute for personal decision making, ensuring that the troops will stand firm in a crisis.

...The exclusive prep school played an important role in the formation and maintenance of an American upper class because the schools enrolled both Eastern patricians and parvenus. By putting a Boston patrician under the same roof with a New York parvenu, the schools ensured that blood and money would recognize their class interests were the same and that they should act in concert. The shared ordeal of the prep rite of passage would create bonds of loyalty that differences in background could not unravel. The collective identity forged in prep schools would become the basis of upper-class solidarity and consciousness. Ultimately, however, sharing alone will not preserve or enhance a class’s interest; as a group, the members must be willing to exercise their power against others. The very definition of power is to impose one’s will on another, and to be effective power must be exercised collectively.

—Peter W. Cookson Jr and Caroline Hodges Persell, Preparing For Power, 1987

Caveman93's picture

Is now a bad time to borrow $150K to go to school to be a doctor? Just curious.