The way I read it now is everyone that has insurance gets the 15,000 deduction. So the people with the $20,000 plan have to pay tax on $5,000, but they already deducted $15,000 so now they only have a $10,000 deduction. No increase. Weird thing is you found an article that finds some way to doubt this plan while most everything written supports this plan.
On 1/25/07, Gruss Gott <[EMAIL PROTECTED]> wrote: > FISCALLY FIT > By TERRI CULLEN > > Tax Break or Burden? > Terri Investigates Whether Bush Health Plan > Would Help or Hurt the Cullens' Bottom Line > January 25, 2007 > > This week President Bush proposed a radical change in the way the > government taxes health insurance, in an effort to spur more > individuals to buy coverage. > > The president didn't offer a lot of specifics in his speech, but > according to a fact sheet1 released by the administration, his > proposal would work something like this: Taxpayers with > health-insurance coverage wouldn't pay federal income or payroll taxes > on the first $15,000 of income -- $7,500 for singles. That income > exclusion is slightly higher than the average cost of health > insurance: According to the Kaiser Family Foundation, the annual > premium for an employer health plan covering a family of four averaged > about $11,500 in 2006, with single coverage averaging slightly more > than $4,200. > > However, for the first time, the cost of employer-provided health > insurance would be considered taxable income for the worker. Right > now, insurance premiums paid for by employers are exempt from income > and payroll taxes. Self-employed workers generally are allowed to > deduct the cost of health-insurance premiums from taxable income. > > Under the proposed plan, if your health-care premiums total less than > $15,000, your tax bill should go down. According to the > administration, a household earning $60,000 would save about $4,500 in > taxes under the proposal, including $2,250 in income-tax savings and > $2,250 in savings from payroll taxes for Social Security and Medicare. > > But if your employer pays for a pricey comprehensive health-care plan, > your taxes could rise. As my print colleague Alan Murray noted in his > column5 on the Bush proposal, that tax increase would likely be borne > by union members and high-paid executives. > > The proposed tax change was first floated by the president's advisory > panel on federal tax reform back in November 2005. One of the panel's > assumptions was that workers preferred that their bosses pay for > insurance with untaxed dollars, rather than having to use after-tax > income to pay for it themselves. The panel also concluded that workers > with employer-sponsored health insurance spend more on health care > than they would if they had to pay for it themselves, which drives up > the cost of health care in general. The panel suggested that a tax > incentive to buy lower-cost insurance might result in more consumers > having coverage and spending less on health care. > > I set out to determine what effect the Bush proposal might have on my > family's bottom line -- though, granted, there's no guarantee the > proposal will ever see the light of day. > > My family's covered by a health-care plan through my husband Gerry's > labor union -- I opt out of my company's health-insurance plan. First, > I needed to find out how much Gerry's employer pays into his union's > welfare fund annually for our family's coverage. I had no idea what > our premiums cost, but I knew it had to be expensive because we have a > preferred provider organization plan, or PPO, with vision and dental > coverage. > > It was relatively easy for me to find that number since the cost is > detailed in Gerry's labor agreement: $12,376. If you don't know how > much your benefits cost, and you want to play along at home, ask your > employer or benefits administrator. (If the tax change is implemented, > I presume employers will be required to report on your W-2 how much > your premiums cost along with your earnings. There's a separate debate > over how companies will determine how much an individual's health-care > coverage costs -- it may not be as simple as dividing the total cost > by the number of employees. But we'll leave that one alone this time > around.) > > I hit my home computer and called up our 2005 tax returns on TurboTax. > I added the $12,375 for the health-insurance coverage that would be > counted as income under the new plan, then subtracted the proposed tax > break of $15,000 from Gerry's annual wages and salaries. That dropped > our federal income-tax bill to $27,593 from $28,364, for a savings of > $852. > > So at first glance the new tax plan would benefit our family. But the > devil is in the details: Would that $15,000 income exclusion be > indexed for inflation? If so, would it be indexed for inflation or > health-insurance-premium inflation? In 2006, medical costs rose 3.6%, > while the consumer price index rose just 2.5%, according to the Bureau > of Labor Statistics. But health-insurance premiums jumped even higher > last year, up 7.7%, according to the Kaiser Family Foundation, and > premiums are predicted to continue to outpace consumer inflation going > forward. > > A 7.7% increase in health-care premiums would increase the cost of our > health-care plan -- and, therefore, our income -- by $13,328 under the > proposed plan, shaving about $65 off our hypothetical tax savings. If > that continued, within a few years our costs would cross the $15,000 > threshold, and we'd end up with a bigger tax bill. Unless the break is > indexed to account for rising premium costs, it's easy to see how it > might morph into a growing burden similar to the alternative minimum > tax, which was never indexed for inflation and is now unintentionally > affecting millions of middle-income taxpayers. Once implemented, might > Congress become dependent on the increasing revenues generated by the > proposed health-insurance tax change, as it has with the AMT? > > I also have to question whether the White House's proposal would have > the intended effect of nudging uninsured people into buying coverage > or prompting workers to drop out of expensive employer-sponsored > health-care plans and find more lower-cost coverage on their own. > Affluent workers would probably stick with their gold-standard health > plans rather than accept a lower level of service in return for a > relatively small tax break. And my experience growing up in a > low-income family makes me skeptical that many of these uninsured > workers would run out and buy health insurance because of a promised > tax break. (I'm assuming you'd have to pay health-care premiums for a > year before seeing any financial benefit from lower taxes.) > Middle-income workers would likely benefit most -- if the tax break is > indexed for premium inflation -- since many are already seeking out > more-affordable coverage on their own because their employers' plans > have become prohibitively expensive. > ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Upgrade to Adobe ColdFusion MX7 Experience Flex 2 & MX7 integration & create powerful cross-platform RIAs http:http://ad.doubleclick.net/clk;56760587;14748456;a?http://www.adobe.com/products/coldfusion/flex2/?sdid=LVNU Archive: http://www.houseoffusion.com/groups/CF-Community/message.cfm/messageid:225712 Subscription: http://www.houseoffusion.com/groups/CF-Community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=89.70.5
