Sunday, March 25, 2012

Why employers should be nervous about tax reform

If Representative Paul Ryan (R-WIS), chairman of the House Budget Committee, is able to sell his approach to tax reform, the dirty little secret about employer-subsidized health care will soon be out of the closet. And single employees will be very unhappy.

Ryan's tax reform plan, deftly reported by Floyd Norris in the March 23, 2012 New York Times, calls for the elimination of any number of what he terms tax preferences: income that is excluded from income under current tax law. According to a nifty chart that Mr. Norris provides and credits to the Joint Committee on Taxation, employer contributions for health insurance is the biggest of these preferences, worth $147.8 billion in untaxed income--about twice the value of Medicare benefits. 

If you've never had to foot the bill for your health insurance--or your employees' health insurance--you likely have little awareness of just how much money we're talking about even at the household level. And what employers pay at the household level is the dirty little secret few employees are aware of. 

In a nutshell. married employees get a double dose of ancillary financial security on top of regular wages, just for showing up with a spouse. And it's more than just a few bucks.

I'll tell you how it works at my company in my next post.

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