Congeries of cross connected concepts
While I don’t agree with much of President Bush’ health care plans as layed out in his State of the Union speech, I do think that adjusting the tax deductibility of health insurance is a good idea.
The fact that employers but not individuals can deduct the cost is a hold over from WWII central planning and should have been dumped decades ago. It creates the “portability” problem and if removed would also rapidly eliminate that problem. You wouldn’t need complex monstrosities like COBRA as health insurance would soon have no relationship to one’s job.
I think that tieing that in to health savings accounts (HSAs) would be a win. Make contributions to HSAs tax deductible for individuals and then allow insurance payments out of the HSAs. I realize that from a libertarian point of view that’s unjustified interference in personal economic matters, but at least it is a step in the right direction. The citizenry is not going to accept health care provisioning as purely a consumer good anytime in the next few decades (at least). Therefore we are going to have some sort of government intervention, the best we can do is shape it to be more individually based.
| erp Wednesday, 24 January 2007 at 12:51 |  |
AOG, you forget that the object of government is to expand and grow, so it’s not likely that eliminating the monster that COBRA would be seen as a plus. The left needs all those thousands, nay millions, of public sector workers to vote Democrat like good little robots.
| Peter Burnet Wednesday, 24 January 2007 at 15:57 | |
It’a good idea in practice, AOG, but will it work in theory?
Seriously, count me in, but I’m not sure the corporate/individual unfairness you refer to can be blamed on central planning. The theory of corporate tax has always been parallel to the theory of profit, but not so personal income tax. I’m all for deducting health care costs, but why not then food, clothing, etc? A necessity is a necessity, no? Well actually, no.
The trouble with all these “third-way” concepts is they are so malleable and subject to non-economic judgments on what is and is not a necessity. When the conservatives get in, you get to deduct private pension savings and private school fees, but then the left takes over and replaces them with daycare and sex-change operations. Our provincial tax return is the most bewildering collection of “this and that” deductions imaginable (most announced on the eve of an election). You spend hours trying to understand them and you think you have finally found one for you, but then it is disallowed in lengthy, computer-generated bureaucratese and you just give up.
All of which is to ask whether the flat tax/no deduction folks are on the right track and whether going for all these self-reliance deductions is undercutting that argument and shooting ourselves in the foot. But even with the flat-taxers, it sticks in my craw that the childless benefit so much over families.
| Annoying Old Guy Wednesday, 24 January 2007 at 20:01 | |
Mr. Burnet;
Job based health insurance showed up in WWII, created because of wage controls. It was a way to de facto pay more without doing that de jure. If wage controls during war time doesn’t count as central planning, what does?
I agree that I don’t see the difference between food and medical care, but the citizenry does. That’s one of the points of my post. I try to be a realistic, pragmatic libertarian and what thanks do I get…
As for the malleable third way concepts, this is one point on which I think OJ with his “Ownership Society” has hit on a key, insightful point. The citizenry of the USA is not going to, in the forseeable future, accept the outright removal of government support for things like medical care, retirement funds, etc. The best option is therefore to change the perception from government largesse to personal ownership. Perhaps, after a generation or two of that, we can move forward again to an even more libertarian and rational system. Ownership should make the programs more resistant to the specialized deductions and federal control.
As for flat tax, I am a strong proponent of a flat tax and support it where ever possible. But that’s not on the table right now and if I have to chose between employer tax deductions and personal tax deductions for health care, I support the latter.
P.S. If you want an example of someone changing his views based on reading weblogs, I will state that OJ has significantly shifted (in a positive direction) my opinion of the “Ownership Society” concept. Oddly, OJ has also made me more opposed to open borders, even though he favors them.
| Michael Herdegen Thursday, 25 January 2007 at 09:15 | |
Health care typically costs way more than does food or clothing, so I think that voters see it as a “big ticket” item, like a mortgage - for which one also gets a tax break.
| cjm Thursday, 25 January 2007 at 09:28 | |
i spend almost $1k a month on food, but no where that amount on health care. it’s the possibility of extraordinary medical costs that chases people into paying $$ for insurance.
In his sixth State of the Union speech, President Bush addresses -- for the first time -- a Congress
