Wednesday, May 27, 2009

Taxing Employer Sponsored Health Insurance, Logic Fails Me

Leading members of Congress call the tax free status of employer provided health insurance distorting and regressive. Yet, they propose giving the same tax status to employer benefits that encourage healthy living. Why should one be taxed and not the other?

Taxing employer health insurance seems a great way to get employers to dump the benefit onto workers. I suspect that's the Government-Industrial Monstrosity's real motive. The Government-Industrial Monstrosity is Eisenhower's Military-Industrial Complex on $ trillions in U.S. Treasury steroids.

Earlier today, Treasury Chief Tim Geithner spoke highly of investment tax credits for community development enterprises. The program has been around since 2000. It provides a direct government benefit to people with enough disposable income to invest in corporations serving low income communities.

The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period.

It seems America's tax policy is skewed toward the investment class. Benefits range from preferred taxation on carried interest to the $25 billion Obama stimulus package tax break for corporations buying back debt. Will they lower corporate tax rates in exchange for tightening loopholes? That idea is being floated.

It's yet another break for the business class. Think how executive incentive pay will soar if they dump health insurance costs to the worker and Uncle Sam cuts their tax bill. That's a double booster rocket for CEO bonus pay, and the executive won't have to do much.

Watch closely how health care reform is structured and financed. It will be telling in light of President Obama's imitation of Bush corporafornication.

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