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Thread: FACT CHECK: White House ignores health concession

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by celticlord View Post
    Removing the tax benefit from employers is an equalization measure that benefits small employers--who create the vast majority of new jobs in this country. Small employers with small insured pools have a hard time offering the benefit and thus are in large part excluded from that tax benefit.

    There is a need to remove the tax benefit from employers--to stimulate small-business employment.
    Dont small businesses already have the tax credit?
    How does removing their tax benefit (and thusly raising their taxes) benefit them?

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by Goobieman View Post
    That's not proof of successful conception of the program itself, that's proof of popularity. As I said before, and as you have ignored, popularity proves nothing regarding efficacy or propriety.
    Except you are ignoring that I stated the program did exactly what it was designed to do. That is a well designed program.


    Better amusing than pathetic, as was your defense of The Obama's policy that put thousands of vehciles that get 15-18MPG on the road, and your deliberate failure to understand that "better" can still be "piss-poor".
    And you fail to understand that if every vehicle bought under CARS gets better gas mileage than those traded in, that lowers demand for gas, not raises it. To suggest otherwise is to prove that you are more interested in trying to make political points than in facts.

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by Goobieman View Post
    Dont small businesses already have the tax credit?
    How does removing their tax benefit (and thusly raising their taxes) benefit them?
    In reality, no, small businesses do not have the tax credit. The smaller the business the more costly health insurance--even with the tax advantages, it still is too much of an expense for small businesses to sustain.

    Thus removing the tax deductibility of health insurance premiums from employers, by removing a putative benefit that small companies in most cases are unable to utilize in the first place, while simultaneously relieving all companies from the expense of health insurance premiums and the administrative burdens of managing insurance plans, is a net economic benefit to small businesses.

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by Redress View Post
    Except you are ignoring that I stated the program did exactly what it was designed to do. That is a well designed program.
    You apparently dont realize that this is not necessarily true, as realizing anticipated results do not necessitate a well-designed plan...

    And you fail to understand...
    No, I fully inderstand that you will defend The Obama, regardless.

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by celticlord View Post
    In reality, no, small businesses do not have the tax credit. The smaller the business the more costly health insurance--even with the tax advantages, it still is too much of an expense for small businesses to sustain.
    Can you show that the savings in premiums will offset the increased tax?

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by Goobieman View Post
    Can you show that the savings in premiums will offset the increased tax?
    Marginal tax rates make it mathematically certain in all cases.

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by celticlord View Post
    Marginal tax rates make it mathematically certain in all cases.
    Doesn't that depend on the supposed savings on premimums?
    Can you show that they will drop to exceed the tax saving?
    Last edited by Goobieman; 08-19-09 at 12:45 PM.

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by Goobieman View Post
    Doesn tthat depend on the supposed savings on premimums?
    Can you show that they will drop to exceed the tax saving?
    They can't do otherwise.

    This is how corporate tax rates break down (federal tax only--states vary):
    http://www.smbiz.com/sbrl001.html

    Code:
           Taxable income over     Not over      Tax rate
    
              $         0        $    50,000        15%
                   50,000             75,000        25%
                   75,000            100,000        34%
                  100,000            335,000        39%
                  335,000         10,000,000        34%
               10,000,000         15,000,000        35%
               15,000,000         18,333,333        38%
               18,333,333         ..........        35%
    The tax advantage of health premiums to the employer is that it is a reduction to income before taxes. (e.g., if a company has revenues of $51,000 and insurance premium expense of $2,000, it's taxable income is $49,000).

    At taxable income of $49,000, a company would owe 15% of that in taxes, or $7,350.

    Remove the insurance expense as a tax deduction, and taxable income rises to $51,000, with a tax bill of $7,750 ($50,000*15% + $1,000*25%).

    Thus, residual income after expenses and taxes breaks down like this:

    With tax deductible insurance premiums:

    $51,000
    ($2,000)
    --------
    $49,000
    ($7,350)
    --------
    $41,650
    ======

    Remove insurance premiums:

    $51,000
    ($7,750)
    --------
    $43,250
    ======

    Because tax rates are less than 100% for all levels of income, every dollar of expense eliminated will always exceed the additional tax burden generated by that savings.

    If one imputes a decline in average premium cost across the whole of society (for the sake of argument, assume a 25% reduction in premium cost, which means an individual ends up purchasing the same insurance for 25% less than what his employer could previously), then employers would have to raise salaries by less than the previous cost of premiums to provide workers with the same compensation economically. Instead of paying $2,000 in insurance cost, an employer might have to pay an additional $1,600 in payroll expense (which is still tax deductible), resulting in a tax expense in this scenario of $7,410.

    Thus:
    $51,000
    ($1,600)
    --------
    $49,400
    ($7,410)
    --------
    $41,990
    ======

    The breakdown may be summarized thus:

    • Scenario 1: Removing the tax advantage of health insurance benefits to employers and pushing health insurance purchases to the individual at worst shifts the cost of insurance to the employer into direct payroll, meaning all employers have the same tax burden as before, but with higher wages for workers. Workers gain Employers break even.
    • Scenario 2: Removing the tax advantage of health insurance benefits to employers and pushing health insurance purchases to the individual at best eliminates the cost of insurance to the employer. Workers break even Employers gain.
    • Scenario 3: Removing the tax advantage of health insurance benefits to employers and pushing health insurance purchases to the individual at best eliminates some of the cost of insurance to the employer, with the rest shifting into direct payroll. Workers gain Employers gain.

    Scenario 3 is the most likely scenario (expanding health insurance market places would exert significant downward pressure on prices), which is why eliminating employer subsidized insurance is the economically prudent and ethically appropriate action to take, regardless of all other health care economic considerations.

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by celticlord View Post
    They can't do otherwise.
    While I appreciate the work you put into this post (and, understand that I am genuine asking for information), doesnt all of this assume that there -is- a reduction in premiums?

    Lets say you pay $10k for insurance per year, which nets you a $1500 savings in taxes. To break even, don't your premoums have to drop by $1500?

    How do you know that will happen?

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    Re: FACT CHECK: White House ignores health concession

    Quote Originally Posted by talloulou View Post
    Healthcare could obviously do with lots of reform whether or not there is a public option.

    I personally am a tad disappointed they seem to be giving up on this whole public option thing so easily.
    Not me; I want them to start acting like the party they claimed and sit down with Conservative Democrats, Independents and Republicans and actually try to make reforms that make SENSE and do not require the Government sinking the American public deeper into debt with asinine Government programs that do nothing but INCREASE the costs, provide MEDIOCRE level of care and provide LESS choice.

    The PUBLIC option is a really DUMB idea of the highest order.

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