Policy Shapers Want To Limit Group Health Ta Breaks

By Allison Bell

October 11, 2005 at 08:00 PM

Share & Print

Members of a Bush administration tax reform council are suggesting that the government pay for a cut in the alternative minimum tax by taxing employer-sponsored health coverage.[@@]

Bush administration officials have always emphasized the high cost of the exemption for employer expenditures on group health insurance.

Now the President's Advisory Panel on Tax Reform, a body led by Connie Mack, a former Republican senator from Florida, and John Breaux, a former Democratic senator from Louisiana, is considering the idea of recommending that the government cap the exemption for compensation spent on health coverage. Members of the panel talked today at a hearing in Washington about the possibility of setting the cap at $11,000.

The American Benefits Council, Washington, an employer group, is blasting the proposal.

"Taxing health benefits will lead to higher costs paid by employees, increased wage demands on employers and could ultimately discourage more Americans from electing health coverage at all," James Klein, the council's president, warns in a council statement. "It makes little sense to consider increasing the cost of health coverage at a time when both employers and employees are already struggling to afford this benefit today."

NOT FOR REPRINT