For example, if high income individual Sarah in a 35% bracket had to include 20% of her employer-provided benefit of $10,000 of health care insurance, she'd include $2,000 of that in her taxable income and pay $700 of tax. She gets $10,000 of health care coverage for a cost of $700. The government can use that $700 (or it likely would take more) to provide benefits not just to employees getting health care coverage at work but to others.
The SFC's finding options all tie to health care which is good to see.
An interesting addition to the list of options is to impose an excise tax on sugar-sweetened beverages. While a good idea as a user-pays type of tax for unhealthy behavior, it will raise a lot of issues including complexity and fairness. After all, there are a lot of foods that may be worse for people including fried foods. Perhaps incentives and education programs to get people to drink water out of the tap would be good.
Anyway, it is nice to see a range of funding options that include reducing overly generous tax breaks that do not benefit everyone, ways to reduce costs, and new ideas like "unhealthy eater" taxes. It is a better list than offered recently by the Administration because it finds health care reform dollars in the health care system where there are a lot of dollars available (although the Administration's approach might be easier to enact). Good for the Senate Finance Committee!
Additional information:
- Senator Baucus and Grassley press release on the options report
- 111th Congressional hearings on health care reform
- my 5/17/09 post on the Administration's tax changes to help fund health care reform
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