Proposed Taxes to Health Insurance Cause Controversy
Posted in Health Insurance
May 22nd, 2009
The taxes on health insurance benefits proposed by Democrat Senators Ron Wyden and Max Baucus have been met with strong criticism as Congress continues to search for ways to pay for coverage for uninsured Americans. This proposal, just one of dozens, suggests that some employees be taxed for their benefits just as they would for payroll.
About the Health Insurance Tax Proposal
The Senators suggest that because the tax break offered through health insurance benefits mostly benefits upper-income employees, it should be eliminated, or at least restricted. In other words, they suggest that employer-provided health benefits above a currently undetermined value could be included in taxable income. This way, the taxed funds could be diverted as funds to pay for those who are uninsured.
Why The Health Tax is Facing Criticism
The main reason that this proposal is facing criticism is the “if it ain’t broke, don’t fix it” debate. Currently no one pays taxes on their health benefits, so why start paying now? However, some members of labor unions say that in essence, they are already paying by having to forgo pay raises so that the company can pay for health insurance.
Other Proposals
This health tax proposal is one of many that are facing criticism. Another is a federal excise tax on a number of soft drinks and other sweetened beverages. This type of tax is said to be justified because it would help prevent obesity and avoid associated medical costs. However, the American Beverage Association strongly opposes this tax because it would threaten jobs in wholesale and retail, as well as for bartenders, waiters, and busboys.
Since the Senate Finance Committee is in the beginning phases of trying to come up with solutions, many of the proposals laid out will not make the final cut. The best health insurance rates are not hard to find, but health care costs are rising across the board with no end in sight.
If you were to propose an option to help fund health insurance for the uninsured, what would you suggest?
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