Lee A. Resnick, MD, FAAFP
With all the renewed talk of tax hikes on the “rich” to pay for everything from healthcare to job creation, I can’t help but see the with anger over how we define rich in this country.
The top tax rate targets incomes of $150,000-$200,000. This despite a rapidly growing “ultrarich” class that consists of earners between $1 million and untold billions. Now millionaires and billionaires pay less as a percentage of earnings than the middle class does.
How did we get here?
Consider: a unionized structural iron worker earns over $50,000 per year plus benefits. After a paid apprenticeship of one to two years, graduates begin earning full paychecks when they are 19-20 years old. Earnings accrued through retirement age (62) equal $2 million. Assuming full-time work till then, a union ironworker can expect $100,000 per year for life at retirement, according to formulas used by the ironworkers union to calculate pensions. Based on average life expectancy, an ironworker’s pension would total another $1.6 million, for lifetime earnings totaling $3.2 million. The ironworker is taxed at a marginal rate of 26% over the course of his lifetime, leaving him with $2.7 million dollars in disposable income accrued. A primary care physician incurs $60,000-$120,000 in cur- rent dollars for a college education and $120,000-$200,000 for medical school, for a total cost of education of $180,000-
$320,000 (for tuition only!). A three-year residency essen- tially delays real earning until the physician reaches age 30. Most family doctors earn between $150,000-$170,000 a year. Assuming the same retirement age of 62 as an ironworker (yeah, good luck), that physician would gross $4.8 million-$5.4 million over a lifetime.
That same physician is taxed at the marginal rate of 33%, so disposable income is $3.2 million-$3.6 million. Most family doctors will have no pension to speak of. An average total edu- cational debt of $250,000-$300,000, amortized with interest over 30 years, brings the cost of education to $430,000-$620,000. Subtract that from disposable income, and lifetime earnings come to $2.7 million-$2.9 million, almost precisely that of the $50,000 a year ironworker.
With tuition for higher education increasing at a rate of 10% per year, and physician reimbursements not even keeping pace with inflation, this is a recipe for disaster!
Where Do We Go From Here?
First, we must close the income gap between primary care physicians and specialists. Many non-surgical specialists earn more than double what the average primary doctor earns. This is unacceptable and largely unheard of in other developed nations, where the difference averages 20%-30%.
Second, we must radically revise how we pay for medical education. Primary care medicine has essentially been relegated to a public service. Fine … then educational costs should be entirely covered for those choosing careers in primary care. While many of our European colleagues average incomes about 25% less than their American counterparts, they begin medical school straight from high school, and their entire education is government-financed. Third, fix the tax code. We cannot continue to punish professionals with tax rates higher than those at either end of the income spectrum. Incentives for investing in professional degrees and a massive revamping of the tax brackets will ensure our nation’s best and brightest are treated fairly
