Our Perverted Tax Code Actually Encourages Poor Not To Work [MUST READ!!!]

Investors Business Daily ^ | 11/11/2015 | Editorial

[expat_panama]

Taxes: Candidates in Tuesday night's Republican debate found near-universal agreement on one thing: The U.S. tax code is an impediment to growth and needs to be radically simplified. A new report shows why this is so.

The nonpartisan Tax Foundation has put out a new report titled "Income Tax Illustrated ." OK, cue the jokes. But it isn't boring. Really.

In stark, numerical terms, it shows just how bad our tax code has gotten — and how it not only violates the idea of equal treatment under the law, but undercuts the very idea of work for some.

Americans might not realize it, but our tax code seems designed to keep poor people poor, by layering on disincentives for those at low incomes to work hard and better themselves.

"As low-income households earn more money, not only do their tax burdens grow rapidly, but they also receive fewer benefits from federal social assistance programs," the report said. "In fact, individuals who move to higher-paying jobs sometimes end up with less overall disposable income, after taxes and transfers."

The report uses two examples...

[snip]

Whatever else you think of our tax code, it discourages work and encourages dependence — the very things, ironically, that ensure people stay poor.

Our byzantine tax system looks as if it were designed to keep the poor down and dependent on big government. But to believe that, of course, would be cynical.

[C. Edmund Wright]

I am self employed - so now, my comments have nothing to do with any corporate program, and how many employees are not smart enough to use it or how many programs are poorly designed.

Thank you for your reasoned post.

My comments were confined to the brilliance and logic behind the concept of low premium - high deductible (with or without HSAs) concept. Insurance was created as an industry as a catastrophic stop gap only. People use to know that. We used the phrase “major medical” back in the good ole days when it worked.

They don’t understand this anymore. Including many very successful Health and Benefits managers. It’s no longer an unemotional risk management tool of financial planning. Now it’s a right, a hand out, and to make it even worse - employees think their employer is “paying” for all or part of it.

Not in reality. It’s part of the cost of keeping an employee on the payroll...just like FICA, workers comp, etc. Ultimately in the long run, regardless of how it’s spun, employees pay for all of it, just like customers ultimately pay all corporate taxes.

Why? Because companies have to have a combination of high enough prices and low enough payroll costs to stay in business. It can be no other way.

This rush to low deductibles, and employer based plans, has blinded so many to the basic realities of economics and insurance as a concept. Health insurance is very affordable when it’s contemplated only to guard against the “big one” - cancer, heart problems, other deadly diseases, etc.

People with HD plans tend to understand this, and thus, they become a better customer for themselves AND the insurance company. Ultimately the spread of risk only works when it’s a win/win.

Insurance cannot protect your health any more than auto insurance can protect your car or life insurance can protect your life. All insurance can do is protect your bank account against the financial damage caused by problems with life, health, car, boat, home, etc.

[dila813]

“No. I do get that. I am a corporate payroll and compensation manager and also have a strong background and experience in employer benefits.”

You don’t get that HSA Contributions are capped? And you are experienced?

And you called my complaint about this absurd, but now you are trying to pretend that I am anti-HSA and high deductible insurance?

You can’t even follow a forum thread, let alone recognize a new family penalty that was created by Obamacare.

[MD Expat in PA]

You don't get that HSA Contributions are capped? And you are experienced?

And you called my complaint about this absurd, but now you are trying to pretend that I am anti-HSA and high deductible insurance?

You can't even follow a forum thread, let alone recognize a new family penalty that was created by Obamacare.

Your reading comprehension is rather poor since I mentioned the cap on contributions and never did I ever say that your complaint about this was absurd or that you where anti-HSA.

Additionally "HSAs were established as part of the Medicare Prescription Drug, Improvement, and Modernization Act which was signed into law by President George W. Bush on December 8, 2003. They were developed to replace the medical savings account system."

The contribution caps have remained largely unchanged since inception and have nothing to do with Obamacare.