It looks like Bush is set to push for more changes in the tax code, and he’s including some features that would make me a big fan if they stay in.
The biggest one will do much to solve the “health care crisis” – it will eliminate the deduction that businesses currently get for offering company health plans.
Why is this a good thing? Am I actually cheering a tax hike?
Not exactly. There’ll be lower individual as well as corporate tax rates, and the plan is supposed to be revenue-neutral overall. But having employers “provide” health plans is decidedly inferior to having the employees buy their own plans, which is what seems likely to take place if this tax break finally, at long last, goes away. The market for health insurance will work better if insurance companies are competing to please the actual policyholders, rather than their employers. The current practice of having everyone in a given company charged the same rate regardless of risk factors is a strong incentive for companies to practice age discrimination and reject less healthy people, and removes an incentive that individuals would otherwise have to take cost into account when consuming health care and to keep themselves healthy.
Other changes include elimination of double-taxation on corporate profits and an expansion of tax-free savings accounts, also eminently sensible moves.
With expanded Republican representation in Congress, this should all have an easier time passing. And it hasn’t been wise in the past to bet against Bush getting his way when he really pushes for something.
(Thanks to QandO for the link)