The President’s Advisory Panel on Federal Tax Reform is getting ready to recommend capping the employer’s deduction on employer-provided health insurance as reported here by KaiserNetwork.org. Excerpt:
Under the current tax code, employers can take a deduction for health insurance provided to employees and workers pay no tax on the value of the coverage. However, some experts have said that those provisions benefit higher-income employees and contribute to the number of uninsured, the AP/Arizona Republic reports (Dalrymple, AP/Arizona Republic, 10/12). In fiscal year 2005, the exclusion of contributions for health insurance premiums and medical care from employee income cost the U.S. Treasury $112 billion in revenue, according to the Office of Management and Budget. Panel member Timothy Muris, a professor at the George Mason School of Law and a former head of the Federal Trade Commission, said that the federal government should cap employer-sponsored health insurance tax deductions at $11,000 annually for family coverage (Guy Matthews, Wall Street Journal, 10/12). Panel members could not agree on whether the proposed cap should apply to employers or employees (AP/Arizona Republic, 10/12). The cap likely would affect only the most comprehensive employer-sponsored health plans. A September survey conducted by the Kaiser Family Foundation found that the average annual premium for family coverage was $10,880.
A Wall Street Journal article reports that the tax break provided to employers for health insurance is “the single largest tax break in the federal budget” according to the Tax Policy Center.