Witnesses at today's House Ways & Means Committee health tax policy hearing continued the long-running war against the group health income tax exclusion.
Joseph Antos of the American Enterprise Institute and Avik Roy of the Manhattan Institute blasted the current, unlimited version of the tax exclusion, which helps employers cut their taxes by about $500 billion per year.
"Workers with higher incomes benefit most from the exclusion," Antos said at the hearing. "It's a regressive kind of tax."
Roy said both Republicans and Democrats can agree on the principle that health care ought to be more affordable. The current tax exclusion works against that goal, he said.
"Hospitals, doctors, and drug companies have a powerful incentive to charge high prices here, because the exclusion from taxation of employer-based insurance prevents patients from controlling their own health care dollars and thereby holding companies accountable for the prices they charge," Roy said.
Antos and Roy said the country should move toward a new tax credit system that would help lower-income people more than those with a higher-income.
Steven Kreisberg, a collective bargaining specialist at the AFSCME, a union, defended the group health tax break.
Limiting the tax exclusion, or imposing new taxes on the workers who benefit from the exclusion, would punish employers for providing, and workers for receiving, the kinds of comprehensive health benefits that every American ought to have, according to Kreisberg.
Rep. Sander Levin, D-Mich., spoke out against the witnesses' proposals to revamp the group health tax exclusion. "You want to destroy the basis on which we built the current system," he said.
