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Tax subsidies compared to medical insurance subsidies; Larry Busack; Beaver County Times; November 4, 2015.
Mr. Busack has written at least five letters since 2014. The only one of those I critiqued was “Time for gas industry to pay its fair share.”
Below is a detailed critique of the subject letter.
“In Pennsylvania almost 400,000 people have medical insurance with an average taxpayer subsidy of $2,600. Compare this to other subsidies such as interest on home loans and expenses paid by companies for salaries.”
[RWC] As I do for all letters, I recommend you check Mr. Busack’s figures if you care about them.
What about business “expenses paid by companies for” employer-based medical insurance? Aren’t those deductions also “subsidies?” FYI, the federal income tax treatment for employer-based medical insurance dates back to FDR during World War II. This tax treatment of employer-based medical insurance interfered with the healthcare market and is one of the main reasons we pay more for medical insurance than we should.
“Consider a taxpayer subsidy for a person paying 25 percent in taxes and buying a $500,000 home with a 30-year mortgage at 4 percent. The average interest deduction would be $19,500 leading to a taxpayer subsidy of $4,900, which is about the same as paying two people $2,600 to buy health insurance.
“Consider a taxpayer subsidy for a company paying 25 percent in taxes and $1 million in salaries. This could be two people being paid $500,000 each or 10 people being paid $100,000 each. In both cases the taxpayer subsidy amounts to $250,000. This is equivalent to paying 95 people $2,600 to buy health insurance. Which of the above is the best use of taxpayer money?”
[RWC] As a reminder, business income taxes are applied to a business’ profits, not gross revenue. It appears Mr. Busack would prefer a gross receipts tax.
As I alluded to above, Mr. Busack didn’t mention his opinion about the “taxpayer subsidy” for “expenses paid by companies for” employer-based medical insurance.
Finally, I suggest you reread the letter’s last sentence referring to “the best use of taxpayer money.” This is similar to language used by President Obama. “Spending in the tax code” and “tax expenditures” are leftyspeak for provisions of the tax code Mr. Obama doesn’t like, including tax rates he believes are too low. Here is the logical extension of this position. Whatever you get to keep from your gross income (wages, interest, dividends, etc. for families; sales revenue, etc. for businesses), Mr. Obama considers a “tax expenditure” and Mr. Busack considers a subsidy paid for by “taxpayer money.” In other words, the fruit of a business’ efforts and a family’s labor belongs to the government and it’s up to the government to determine how much your business or family is allowed to keep.
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