I was surprised over the last year that when the Republicans suggested taxing excess health care benefits that it was not embraced as a good economic policy. I thought it made all the sense in the world
When the current Republican health care proposal was outlined giving individuals a tax credits for their health care coverage and eliminating the deduction at the corporate level I was intrigued. If a company paid $12,000 in health care benefits and the employee replaced that with a personal policy for say $10,000 two things would happen. The employer over time would pay such worker higher wages. So if wages went up $12,000, assuming a 20% tax rate. The employees would be ahead $9,600. Add in the $5,000 tax credit for a family and they would have $14,600 in their pocket to purchase their own $10,000 policy. Seems like its a better system than a national plan
Funny thing, in today's NY Times there was an article where businesses are afraid the Democratic health care proposal could increase employer payroll costs by as much as 6 or 7%. Click here for link.
But the best thing I read on this was a WSJ editorial on October 25 that pointed out that several of the Democratic economic advisers have been big proponents of eliminating the tax subsidy that is only granted corporations, generally supporting a plan such as the Republicans have proposed. Click here for link
When the current Republican health care proposal was outlined giving individuals a tax credits for their health care coverage and eliminating the deduction at the corporate level I was intrigued. If a company paid $12,000 in health care benefits and the employee replaced that with a personal policy for say $10,000 two things would happen. The employer over time would pay such worker higher wages. So if wages went up $12,000, assuming a 20% tax rate. The employees would be ahead $9,600. Add in the $5,000 tax credit for a family and they would have $14,600 in their pocket to purchase their own $10,000 policy. Seems like its a better system than a national plan
Funny thing, in today's NY Times there was an article where businesses are afraid the Democratic health care proposal could increase employer payroll costs by as much as 6 or 7%. Click here for link.
But the best thing I read on this was a WSJ editorial on October 25 that pointed out that several of the Democratic economic advisers have been big proponents of eliminating the tax subsidy that is only granted corporations, generally supporting a plan such as the Republicans have proposed. Click here for link
2 comments:
I think that giving each individual the responsibility over choosing and purchasing their own health-care plan is dangerous. First, people are unreliable, certainly moreso than a company would be. Second, when said people screw up they will have themselves to blame for not choosing a plan that suited them (or not choosing one at all); if that happens, people will put that blame on the government, who miscalculated by giving them that responsibility. Lastly, whos not to say that the insurance companies wouldn`t get greedy when they only had to deal with individuals, instead of bulk coverage purchases?
Good points, but by extension will we all eventually need the governement to next manage our car insurance, retirement plans, how many kids a family can afford, etc.? Maybe they would do a better job.
Relying upon the government to make our decisions is the same as letting a parent manage a child's life into their 20's and 30's. The outcome is usually not optimal.
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