Good News: Obama May Tax Employee Health Benefits

It doesn’t take much guts to say that you’re giving tax cuts to 98% of the population, and a tax hike to 2% of the population.  However, the latest noises coming from the White House indicate a little nerve. And we like it!

According to the New York Times, the Obama administration is open to the idea of taxing employee health benefits in order to finance healthcare reform.  It would be controversial for sure, especially since it would represent a tax increase on working Americans. But it could begin to drive a stake into the heart of employer-sponsored healthcare. For so long, it’s just been the norm that employment is the pathway to having health insurance, but this state of affairs is arbitrary and counter-productive.

Of course, there’s a lot to be nervous about. If the only reforms made to healthcare are just more spending and redistribution, that will be worse. But if we tax and destroy employer-sponsored healthcare while opening up real markets for individuals, then then pain of higher taxes will be worth it.

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