Should employer provided health care benefits be taxed? BrianInNYC

Lately I’ve been reading more and more that the president is willing to rethink his stand on taxing employer provided health care coverage.  I for one am very glad to hear it, this is perhaps the only issue I found myself in agreement with Senator McCain.    Some further reading on the subject:

Battle #1: Taxing health benefits

President Pivots on Taxing Benefits

Not-so-easy money, Taxing health benefits comes with costs



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19 responses to “Should employer provided health care benefits be taxed? BrianInNYC

  1. dnd

    On the one hand, taxing health care benefits is a step towards the inequitable nature of procuring health insurance.

    On the other hand, it’s a straw man and a distraction to more important issues in health insurance reform.

  2. Oh I don’t think it’s a straw man at all. I’m self employed, no one is giving me 10 grand in tax free income each year.

  3. dnd

    That’s what I meant by “the inequitable nature of procuring health insurance.”

    If you are self-employed, you can deduct the cost of premiums from your AGI, which is different from getting a tax free benefit. If you are unemployed, or your employer doesn’t provide health care coverage, you’re really screwed as you pay for health insurance with after tax dollars.

    Taxing health insurance benefits isn’t gonna solve the larger problem.

  4. “If you are self-employed, you can deduct the cost of premiums from your AGI”

    Not until you cross the 7% threshold.

    Also dnd what is the benefit of the American tax payer subsidizing an industry that has so failed the American people? Once you get past the rhetoric of the “no new taxes” crowd, there is no rational reason for continuing this policy.

  5. dnd

    “Not until you cross the 7% threshold. ”

    Yes you can. If you’re unemployed or don’t get health benefits at work, you have to cross the 7% threshold. Self employed, comes right off the top. Very unfair.

    As for the rational reasons, reread the “Not-so-easy-money” link you posted.

  6. “Taxing health benefits is, indeed, one way to bridge the funding gap, but it shouldn’t
    be adopted without serious consideration of the losers from such a policy and without a viable system already firmly
    in place that covers everyone.”

    I don’t see taxing health care benefits as the be all – end all, but part of a comprehensive plan. Also I wouldn’t have a problem with lower income workers being excluded from the tax. Also I do think it’s in our national best interest (and frankly the moral thing to do) to move away from the employer based model of providing health care coverage, this would be a step in meeting that goal.

  7. dnd

    Employer-based health insurance was the result of wage-price freezes, a dumb idea to help mitigate a really dumb idea.

    Frontline did a show of things that work. Something we can learn from rather than trying to reinvent the wheel with political spokes.

  8. “Employer-based health insurance was the result of wage-price freezes, a dumb idea to help mitigate a really dumb idea”

    Yes I know that, and yes a really dump, short sighted idea indeed.

  9. eprof2

    A very bad idea. Brian, you get to deduct your health insurance right off the top as a business expense. I agree with dnd: this is a very bad idea and is a diversion from the overall goal of universal health care. And, as you know, I prefer the single payer single provider system.

  10. And why do you think it’s a bad idea eprof?

  11. eprof2

    If you’re working for an employer for wages and the government wants to tax that portion of the health care contribution you and the employer have paid, it will the effect of driving down take-home pay as health care is a pre-tax deduction.

  12. As I said I’m willing to peg the deduction to a certain income level and above. Look we’re wanting a lot from the govt. we better start coming up with serious ways to increase revenues.

  13. dnd

    Hey eprof2,
    Rockies just swept the Cards in a four game series. In St. Louis! This means the Dbacks are back in the NLW cellar with the Rockies 😉

  14. eprof2

    Wow, dnd, that’s something to get really excited about — back in the cellar with the Rockies!!! LOL!!!

  15. dogs eye view

    Hello all. Sounds like this bears watching. And understand how self-employed will have different views than those with a (large) employer. Myself, self-employed is usually preferred.

    I agree with eprof about single payer healthcare. Medicare and VA work. The insurance companies are in it for profit, which doesn’t work so well with healthcare.

    Am in North Carolina. Seeing lots of Mike Farrell speaking for single-payer ads (on CNN, I think). Are you seeing them too?

    My mom has excellent, exceptional healthcare as a military widow. I don’t expect that all of us could enjoy precisely what she has, but there’s got to be a place for serious preventative care and a more equitable solution.


    Opening a can of worms: obesity leads to so many health complications. Should those sporting extra poundage pay a surcharge for their care? Might it be an incentive to slim down? (And I’ve gotten a bit heavy myself of late. Definitely in that glass house.)

    Michelle Obama’s choosing common sense good eating and health issues is so important. Mundane seeming, maybe, but can bring such excellent results.

  16. unlikelyburrito

    not here for any more than a nano-second, but….as an employer, I think taxing the a health care benefit will do two things:

    1. make the employee see that it IS in fact compensation

    2. and maybe they will stop the double dipping by being on two policies ( their own and their spouses.)

    Healthcare coast are a b*tch, and not to mention it but if you hire a woman in child bearing years you pay about 4 x the amount as a male the same age.

    At some point the benefit to offering full heath insurance will be outweighed by the cost, and then we will stop offering it.

    Hope you are all well….btw the Indians are a disgrace to the game of baseball!


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