Fact or Fiction? McCain health care benefit tax

[tokenuser]

OK, I want to find out something here.

I heard yesterday that McCain has some health reform proposals of his own, and that the way it would work is that you will get taxed on your health benefits.

So, if you earn $40K/year, and have health benefits totaling $10K (from an employer - including personal contributions not specified), you - as an individual - would get taxed on the $50K.

Now, I can't cite a source on this, as it rose in general conversation, but if its true its another WTF moment.

Can anyone confirm or deny this?

[secret-steve-crumbles]

Say you're earning $100,000 a year and your company provides about $9,000 toward your $12,000 family premium, which is about average. Today you're taxed only on the $100,000. Under McCain's plan, you'd also pay on the $9,000. That could mean an extra $3,000 or so in federal taxes alone. To compensate for the extra levy, McCain would provide a $2,500 federal tax rebate for individuals and $5,000 per family, meaning a family would simply subtract $5,000 from its tax bill, the equivalent of a big cash payment.

Pretty decent article outlining both plans (http://money.cnn.com/2008/03/10/news/economy/tully_healthcare.fortune/) From CNN of all places.... And don't get turned off by the title, he rips into McCain a good bit.

[bigshotprof]

So this is primarily designed as a tax break for the employer? If you pay taxes on it, they don't. Right?

[yssman]

Just as a side note:

Its still state-funded health care. Uh oh Neo-Cons, you're giving us the dreaded socialized medicine that you fear so much...

[masherscf]

This is a little hard to compute for me. I make NO contributions to my health plan...none. And, my employer doesn't make any contributions on my behalf...at least not directly. I'm covered by a City of New York employee benefits plan. It covers everything from city hall janitors to cops. I'm not sure if there's an actual reckoning of payments made on my behalf. The number of people covered by the plan could easily be several hundred thousand.

[ariastar]

Uh, no. Double taxation on that money, for one.

[bigshotprof]

Here is a little updated analysis.

http://thecaucus.blogs.nytimes.com/2008/09/16/journal-disputes-mccains-health-care-claims/

[ariastar]

So this is primarily designed as a tax break for the employer? If you pay taxes on it, they don't. Right?

As it can be seen as an investment (healthy employees are ones who can work rather than having to take time off), the cost employers pay can be a tax write-off. Basically what this looks like is a way for the government to get a cut of it one way or another without beginning to impose restrictions on which company investments are exempt from being written off.

[bigshotprof]

This is a little hard to compute for me. I make NO contributions to my health plan...none. And, my employer doesn't make any contributions on my behalf...at least not directly. I'm covered by a City of New York employee benefits plan. It covers everything from city hall janitors to cops. I'm not sure if there's an actual reckoning of payments made on my behalf. The number of people covered by the plan could easily be several hundred thousand.

Isn't the City of New York your employer in this case?