Presidential Panel Recommends Caps on Tax Deductions for Employer-Sponsored Health Insurance
The nine-member President's Advisory Panel on Federal Tax Reform on Tuesday recommended two plans to revise the federal tax code, both of which would cap income tax deductions for employer-sponsored health insurance, among other provisions, the New York Times reports (Rosenbaum, New York Times, 10/19). Under the current tax code, employers can take a deduction for health insurance provided to employees, and workers pay no tax on the value of the coverage (California Healthline, 10/12).
Under the panel recommendations, employees would have to pay income tax on employer-sponsored health insurance premiums higher than $5,000 annually for single coverage and $11,500 annually for family coverage (New York Times, 10/19). According to the Pittsburgh Post-Gazette, former Sen. John Breaux (D-La.), vice chair of the panel, had to "push the panel to agree" on the caps on income tax deductions for employer-sponsored health insurance.
The panel had previously discussed a cap of $8,400 annually for family health coverage (McFeatters, Pittsburgh Post-Gazette, 10/19).
President Bush, who established the panel earlier this year, asked members to redistribute the "burdens and benefits" of the federal tax code (Pender, San Francisco Chronicle, 10/19). However, Bush "is not committed to adopting the commission's recommendations, and many are sure to be unpopular in Congress," according to the Times (New York Times, 10/19).
Most observers predict that the panel recommendations have "little chance of adoption because of the broad range of interest groups" they would affect, the Chronicle reports (San Francisco Chronicle, 10/19).