Quote:
|
Originally Posted by flstf
It does not seem fair to allow people's employers to provide insurance tax free while at the same time not allowing those who purchase insurance on their own to not be able to deduct the cost. I'm not saying it is a great idea to tax the benefit (income) but it is a good idea to allow for the deduction.
Besides I imagine that the amount an employee spends on insurance would also be deductible and most times would be larger than the additional tax on the employer provided benefit.
|
Let us compare the impact of a "benefit tax" on an employee who earns $40k vs. and employee earning $200k per year.
The $40k earner spends all of his disposable income to provide necessities and a few non-necessities for his household each year, and pays sales taxes on all that he has spent.
The $200k earner does not need to spend all of his income, just to live, and does not pay sales tax on the portion not spent on necessary retail purchases.
The $40k is taxed at a 7-3/4 percent rate on his entire income, for SSI and medicare insurance.
The 200K earner is taxed on only the first $90k of his income for SSI & medi, so the tax rate for him, on his entire income is just 3-1/2 percent.
Assume that the benefit amount in Bush's proposed tax is $6000 per year, and the tax is 10 percent. The added tax burden to the $40k per year earner is an additional yearly tax of 1-1/2 percent of his entire income, vs. a tax of just 3/10 of one percent for the $200k earner.
The $40k earner, statistically, is likely to own no common stock in health insurance or in any other stock company.
The $200k earner has contrbuted to the campaigns of his congressman and senator. He is more likely to persuade his representatives to vote yes for Bush's "reform" bill, than ten or fifty $40k earners who contact their reps to vote "no", but who never could afford to be campaign contributors, could hope influence the rep's vote.
The $200k earner is more likely to own or to buy stock in the health insurance vendors who stand to gain from Bush's tax plan. The $200k earner buys a hundred shares in Aetna tomorrow, and he sells the stock on the news that Bush's plan has passed in the senate, after it passed in the house.
The $200K earner nets $1k on his stock trade, pays 15 percent cap gains tax, $600 for Bush's new health benefits tax, and goes out for a nice dinner with a nice bottle of cabernet with the last $150 from his stock trade profits.
The $40k earner drops his weekly family vacation savings set aside from $20 per week, to $8, and uses the other $12 to compensate for the weekly payroll tax increase resulting from Bush's health benefit tax.
Sounds fair to me, too....great reform idea, president Bush !