It can’t all be about Iraq — or warrantless wiretapping, or torture, or corruption, or…you get the idea — so Bush is talking health insurance:
President Bush will propose a tax deduction of $7,500 for individuals and $15,000 for families regardless of whether they buy their own health insurance or receive medical coverage at work.
The proposal, to be announced Tuesday in his State of the Union address, is aimed at giving the uninsured an incentive to purchase a medical plan. It also is designed to encourage those with generous plans to either embrace cheaper insurance or pay taxes on the part that exceeds the deduction, a Bush administration official familiar with the proposals said Saturday.
If passed by Congress, the proposal would be the first time that workers could get a tax break if they bought their own insurance. But it also would be the first time that some employer-provided health care benefits could be taxed. Health care benefits provided by companies are currently exempt from income and payroll taxes. (emphasis mine)
Health insurance coverage is screwy primarily for one reason: due to restrictions on wages under FDR, employers offered health insurance instead of higher pay, it being exempt. The wage caps went away, the policy imbalance in favor of employer-based health insurance remained.
Bush’s response? Slap an arbitrary number value on coverage & say “get less than this & we’ll cover it, get more than this & we’ll tax you on it”. Basically if you still have decent insurance through your job you’ll be penalized for it, when the structure isn’t your fault anyway. Great…
As for the tax “break” for buying your own plan, it doesn’t go far enough. Employer plans are untaxed at the moment, just make it so all plans are untaxed, that’d be a lot simpler. Besides, too many different things are taxed as it is.
