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Taxing Health Benefits 15 March 2009

Posted by Lao Tzu in economy, medicine, politics.
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Many in this country have been against the idea of public health care. The idea of our tax money going to provide health care to the population was repugnant to most. As our children attend public schools and we drive on public roads, the idea of ensuring (with an e) that every citizen had access to health care (diagoses, medicine, treatment) was just too much for some. I never understood their rationale, myself.

Interestingly, the white house has recently stated that it would consider the idea of taxing our health benefits (full story) in order to raise money to help pay for the new health care plan. I assume that is because we are broke from bailing out the banks.

For those that don’t see the irony here, let me break it down. Our free enterprise system implies that we pay for our own health care. But it is too expensive, so we get some assistance from insurance companies. But they end up being too expensive, so we get help from our employers where they pay an ever decreasing portion of the cost of the insurance. All of a sudden, someone sees that as an opportunity to extract more taxes from either you or your employer. So this means that instead of you paying taxes to get free health care, you pay for health care, and you pay taxes for any assitance you get to pay for your health care. Just the opposite of socialized medicine.

What’s worse is that our Government is just blatantly making up new taxes without justification in order to pay for the bailout. When I say ‘justification’, I refer to the fact that a tax must serve some purpose against the thing being taxed, not soley for the sake of bringing in revenue. If this is allowed, there is no theoretical end to this scope.

But the funniest part of this story is where it states, “Those who want to tax benefits in whole or in part make two main arguments. They say the tax exclusion is a generous subsidy that insulates employees from the true costs of health care, …”

I thought that was the whole point of insurance.

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