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Income Tax on the Rich or Excise Tax on Rich Health Plans?

Health Care 2009 Tax on rich plans

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#1 QueenTiye


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Posted 29 October 2009 - 02:43 PM

Great topic from Derek Thompson at The Atlantic: http://business.thea..._rich_plans.php


Should Health Care Tax Rich Income or Rich Plans?
Whether we get the House or Senate version of health care reform, the tax man cometh. But in what form? The House health care plan unveiled today leans on a surtax on rich people to pay for the expansion of Medicaid and insurance subsidies for less fortunate Americans. The Senate Finance plan dreamed up an excise tax on richer insurance plans. Those might sound similar because I described them both using the words "tax" and "rich," but they're very different ideas, for a couple reasons.

The surtax isn't really about changing behavior. It's just a tax on high income included for the sole purpose of making the bill deficit neutral. The excise tax is actually designed to have a specific incentives: To encourage employers to switch to cheaper plans and move more of their workers' compensation into wages. In fact the Joint Committee on Taxation estimates that up to 80 percent of the revenue from the excise won't come from the excise tax, but from income taxes on wages that increase as a result of that switch.

The blog post is only one paragraph and a couple of sentences longer - might be worth it to click over and read the whole thing. :)  But, assuming we do get one or the other this year, what's your preference, and why?


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#2 Cardie


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Posted 29 October 2009 - 03:51 PM

Excise tax, although I'm dubious that employers will avoid the tax be selecting cheaper plans but return tthe difference in the form of higher wages.  I'm thinking they will just keep it.

But anything used to pay for healthcare reform ought to be related to healthcare and not just be a generalized tax increase on any particular group.  I can see means-testing Medicare premiums and raising them for the very rich, but not just an across the board tax increase (other than repealing the Bush tax cuts which went too far imo.)

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#3 Nick



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Posted 29 October 2009 - 05:25 PM

Like Cardie, I don't believe employers will pass along any savings to their employees.  Tax the rich.

#4 Nonny


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Posted 30 October 2009 - 11:41 AM

Tax the rich!  

And did anyone honestly think I'd say anything different?
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