Thursday, April 23, 2009

Tax Free Status Distorts Health Insurance but Not Nonprofit Political Organizations?

Senator Max Baucus, Chair of the Senate Finance Committee, spoke for taxing employer-sponsored health insurance benefits. Baucus used the words "aggressive" and "skewing" while citing the distorting impact of the longstanding tax free benefit.

Never mind that employer-provided insurance is way down. It once covered 70% of Americans. It's down to 58% and imploding. Those who kept the benefit asked employees to pay more of the premium.

What else is tax free and distorting? Many churches, community hospitals, social service organizations, and nonprofit political organizations. "Swift Boaters for Truth" may soon have better tax benefits than employers wanting to provide a health insurance benefit.

I suggest America tax political nonprofits first. Those groups are much more aggressive and skewing than dwindling employer-sponsored health insurance.

Dirty Max won't reveal the real motivation behind taxing health insurance. It's presented as a revenue strategy. In reality, corporations know how to manage their tax burden. If the individual can deduct health insurance costs, but businesses can't, guess who'll pay for health insurance? Corporations will shed the benefit, yet another burden for employees.

Defined benefit plans turned into 401(k)'s and 403(b)'s. When times got tough, the employer match disappeared. This means employees fund their retirement. Expect a similar move in health insurance. CEO incentive pay needs another leg up. It will happen on the employee's back, once again. When will it break?

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