Tuesday, August 26, 2008

McCain Will Tax Your Health Care Benefits

An article in the New York Time stated that, "Mr. McCain proposes to eliminate the exclusion of health benefits from taxable income." That's right, the Republican presidential nominee will add a significant tax burden to the middle class. McCain's overall plan is quite complicated and the, "Devil is in the details." Unfortunately, all the details of this plan have not been worked out.

The New York Times article goes on to state:

"In exchange, he would provide refundable tax credits of $2,500 to single people and of $5,000 to families, with the goal of stoking competition in the individual insurance market. The elimination of the exclusion would generate $3.6 trillion over 10 years, according to the McCain campaign, and that money would pay for the tax credits.

While the change would primarily affect those with gold-plated insurance policies, health analysts point out that middle-income workers with conventional coverage could conceivably pay more in regions where insurance costs are high. Over time, that might depend on how the tax credits are adjusted for inflation, a detail Mr. McCain has not discussed."
Although the McCain campaign has gone on at great lengths to explain the benefits of their new health-care plan it is filled with uncertainties. But any way you slice it or dice it, if you make health care benefits subject to taxation, that's a tax increase. The Times article quoted Jonathan B. Oberlander, a political scientist at the University of North Carolina at Chapel Hill. “You can argue with lots of merit that it’s a responsible increase, that it takes away an inequitable exclusion, but it’s still a tax increase.”

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