Bush to float health insurance tax break

yahoo (via AP) ^ | 1/20/2007 | DEB RIECHMANN

[PtrainerNYC]

WASHINGTON - President Bush will propose in his State of the Union address a tax break for people who buy their own health insurance and a limit on how much coverage individuals can receive tax free at work. ADVERTISEMENT

The proposal to be announced Tuesday offers a tax deduction to people who purchase coverage and urges those with generous plans to either embrace cheaper insurance or pay taxes on part of it, according to a Bush administration official familiar with the proposals.

If passed by Congress, the plan would be the first time that workers could get a tax break for buying their own insurance. At the same time, it would be the first time that some employer-provided health care benefits could be taxed.

[goldstategop]

A tax break for health insurance is a good idea. Why not let people deduct the cost of it off their tax return like they do their mortgage payments? People shouldn't be forced to choose between their health and eating dog food.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[oceanview]

and that's why, when people see that they are being taxed on their employer provided health benefit - their first reaction will be "I barely use this plan, so I'll drop it to save on taxes". this tax idea will result in less people having coverage. as a general rule, if you want LESS of something - tax it. tax employer provided health benefits, you'll get less of it. and those newly uninsured people, will be more willing to accept the idea of a national health care plan.

[flynmudd]

I work for a sub-s company.

[VRWC For Truth]

More Bush pandering to the left and it fits right in with his shamnesty plans.

[Bogeygolfer]

"However, we just started a plan with an HSA component, and as the owner, I don't get the deduction for contributions to my own Health Savings Account (although, of course, my business gets a deduction for contributions to my workers' accounts)."

Here's some good news for a Saturday. I could double check when I'm back in the office but you get the deduction on your return. The company will pass it on to you as income and then you get the full deduction on your return. In the end it's semantics. Not many folks understand these things yet but I believe all you miss is the instant gratification.

[sitetest]

Dear flynmudd,

"I work for a sub-s company."

That's nice.

I own one.


sitetest

[sitetest]

Dear Bogeygolfer,

"Here's some good news for a Saturday. I could double check when I'm back in the office but you get the deduction on your return."

Well, I'll have to check with my accountant, but my insurance agent, who also owns his own small insurance brokerage, assured me that I don't get and tax deductibility for the funding of my HSA.


sitetest

[pepperdog]

I think you said it! We are not so stupid as to embrace another tax on ourselves. The Republicans are fools if they go for this.

[pepperdog]

"I would count all employer paid benefits as income. I would also count all government transfer payments as income. Broaden the base and reduce the rates."

Are you running for office? Because if you are I want to be sure I can vote against you. You are living in a dream world if you truly believe there would be any reduction in any rates anywhere. The insurance industry makes the IRS look as compassionate as the Salvation Army. What would really happen is insurance rates would remain the same or rise, and oh! looky, looky....it's a magical mystery tour that puts more money in the treasury.

The average working person is already burdened heavily with taxes at every level, I find it hard to believe you espouse even more taxes in the interest of "fairness". Why don't you just pay everyone the very same salary, take the very same amount out for taxes, etc. Now wouldn't that be perfectly fair?

[oceanview]

you'll see - government employees, teachers, etc - who receive health benefits as part of their compensation, will be exempt from this somehow. either they will fall below the exemption limit (7500 single, 15000 family), or will just be excluded.

[oceanview]

is my parking spot at work considered an "employer provided benefit". should it be added to my wages for tax purposes? how about the free coffee they make available to me?

[onyx]

Good eye, Wolfstar. I see the poster has been banned.

[pepperdog]

Yep, I'm sorry but you'll have to pay. We must be fair and get you on the same level as everyone else. It's the Communist way.

[flynmudd]

Read your 2006 Fringe Benefits section on taxable benefits.

[sphinx]

Of course rates can be reduced. The top rate was 28% when Reagan was done. Then we started backsliding.

The 28% rate was achieved by broadening the base. Even then, the reformers didn't tackle the big tax expenditures, which we should. Income is income. Treat it all the same.

[oceanview]

and the biggest area - taxes on unearned income - is obscene. people like Theresa Heinz Kerry and the Walmart heirs, making interest income off huge trust funds, paying no payroll taxes, and a low income tax rate.

[nj26]

"The average working person is already burdened heavily with taxes at every level, I find it hard to believe you espouse even more taxes in the interest of "fairness". Why don't you just pay everyone the very same salary, take the very same amount out for taxes, etc. Now wouldn't that be perfectly fair?"

Bush appears to be trying to revive Stalinism.

[Bogeygolfer]

May a self-employed person contribute to an HSA on a pre-tax basis?
No. Self-employed persons may not contribute to an HSA on a pre-tax basis and may not take the amount of their HSA contribution as a deduction for SECA purposes. However, they may contribute to an HSA with after-tax dollars and take the above-the-line deduction.

The above is from frequently asked questions at a tax website. It conforms to what I know. My guess is that the confusion stems from the pre tax vs post tax (on your return) which is confusing a number of industry professionals. The post tax is actually easier you just don't get the payroll tax deductions. The other confusion could be about the underlying premiums but my guess is that part is pretty basic. Ask your accountant but to my knowledge everybody gets the hsa deduction.

[Leftism is Mentally Deranged]

It's a good idea. Bush is trying to remove the unfairness of NOT taxing employer-paid health premiums. (Would it be fair to NOT tax employer-paid mortgage payments, or car payments?)
Bush wants to move away from the current unfairness. He will be xxxx upon, criticized and slammed for it.
I would go all the way. Tax employer-paid health premiums.
OR
leave their taxable status alone, but provide a 100% deduction from gross income for health premiums paid by the self-employed and those whose employer doesn't pay for health premiums.
No other way is fair.

[mpstan]

Personally, I think that Joe is a bit more astute than Sam....A benefit is just that a benefit. In a free system we make the cognitive decision to work at the corner grocer or for a company that offers non taxable benefits. Unfortunately, Our two party system has evolved into a choice between which type of socialism do you prefer. One party represents those that are waiting for the next political handout and the other is determined to undermine our middle class in the spirit of globalization. I think this is a huge issue that the Freepers need to take notice of.