House Democrat Jared Polis was one of three Democrats to vote against the House health reform bill in his committee. In the video, he explains his vote.

If I understand his concern, it’s that he can’t vote for health care reform because the US tax system might tax owners of S-Corporations at a higher rate than other corporations.

So we can’t pass health reform until we fix the tax system. Is that it, Mr. Polis?

Using that argument, we should also abolish the US Senate, because it doesn’t work well either and is bottling up health care reform and threatening the entire economy.

What he appears to be saying:

The nominal US corporate tax rate is 35 percent. [Of course, virtually no large corporation actually pays 35 percent, but never mind that exacerbating fact.]

In contrast, if you own a family business and structure it so that you take its profits as personal income, then the tax rate is whatever your individual tax rate is. That rate may become higher than the nominal corporate tax rate if you are very wealthy — a millionaire.

For example, if your family-owned business earned $1 million this year in net profits (net after paying all expenses, like wages and health care costs, etc) and that $1 million became your personal income, you’d be taxed at the individual rate applicable to a millionaire.

Today, the marginal tax rate (MARGINAL, not the average) for the wealthiest people is 35 percent. When the Bush tax cuts for the wealthiest expire next year the marginal tax rates returns to 39.4 percent — what it was when Bush was first elected. [Historically, the highest marginal tax rate was once 90 percent, and still about 60-70 percent back before the Reagan era, during a period of strong economic growth and rising wealth for the middle class, but never mind these troublesome facts.]

Now put the House proposed surtax on top of the highest rate after Bush cuts expire: the highest surcharge — 5.4 percent – kicks in at incomes above $1 million/year. So for our hypothetical millionaire, that would make the marginal tax rate 39.6 plus 5.4 = 45 percent. And when you add state and local taxes, you can, in some states, get marginal (not average) tax rates over 50 percent.

At this point, Republicans and frightened Democrats go into hyperventilation, even though such rates are well below what they used to be and well below what other advanced economies handle — you know, the ones with universal health care at lower costs per capita than our system.

So what Polis appears to be concerned about is that very successful "small business" owners who are also millionaires and who pay taxes at individual rates could face 45 percent (or higher) tax rates, whereas ordinary businesses would face only the nominal 35 percent corporate rate. MacDonalds would, he argues, get an advantage over your family-owned restaurant chain. [Assumes you ignore that corporate profits would be taxed twice -- h/t wigwam]

But so what? This disparity, given the real, effective tax rate on corporations, is already present between different types of companies, and the disparity will become slightly worse with the expiration of the Bush tax cuts, independent of health care reform. Does he opposed the expiration of the Bush cuts that created massive deficits?

And is Jared Polis really saying he can’t support health care reform unless we fix the entire tax code as it relates to corporate taxation?

Because I want to know how Jared Polis is going to explain that condition to the 30-40 million Americans that could remain uninsured because he’s worried about very successful millionaire family business owners.

And if he doesn’t want to tax millionaire business owners, who else does he have in mind? The middle class? Medicaid recipients? Or to frame it differently, since Polis supports single payer, whom would he tax to pay for it?

Update, via slinkerwink: Well, this is interesting. In the video, you’ll see/hear Polis making sure we know he voted for Kucinich’ single payer opt out amendment for states. He’s also a sponsor of HR 676, a single payer bill. So how would that bill pay for itself?
• Maintain current federal and state funding for existing health care programs
• Establish employer/employee payroll tax of 4.75% (includes present 1.45% Medicare tax)
• Establish a 5% health tax on the top 5% of income earners, 10% tax on top 1% of wage earners
• ¼ of 1% stock transaction tax
• Close corporate tax loopholes
• Repeal the Bush tax cuts for the highest income

Huh. Why do I feel the man owes us a better explanation?