Saturday, October 3, 2015

A Minor (But Important) Point

     In a post last week I mentioned that I agreed with a lot of Hillary Clinton's policies and ideas. Or at least some of them. She seems the most sensible of all the candidates I've seen ... so far.

     So she's supposed to be a health-care expert. But she has flubbed on this one.

     Here's the point:  Currently, if you get your health insurance from your employer, the income you use to pay for health insurance is tax free. But if you pay for health insurance on your own -- including most people paying for Medicare -- you first have to pay tax on the money, and then use what's left over to pay for your health insurance premiums.

     That's fundamentally unfair, don't you think? The government has set up a two class system -- those who get health insurance tax free; and those who don't.

     Now instead of fixing that discrepancy, Clinton wants to add to the unfairness -- or, if you will, make the rich richer, and the poor poorer.

     She made news the other day by reiterating her proposal to repeal the section of the Affordable Care Act that involves the so-called "Cadillac tax" on health insurance.

     The tax, set to take effect in 2018, would be a tax on so-called Cadillac health insurance plans, ones that exceed certain thresholds, which are proposed at $10,200 for an individual and $27,500 for a family.

      In other words, the ACA is scheduled to cap the amount of tax-free income employees can use for health insurance. Clinton wants to do away with the cap, allowing employees to get a tax break not just on the first $27,500 they spend on health insurance, but any amounts even above that, with no limit.

     Meanwhile, those of us who do not get health insurance from the workplace, we get no break at all. We pay tax on every single dollar we use for health insurance. Our cap is not $27,500. It's not $10,200. It is $0.

     If Clinton wants to get rid of the "Cadillac tax," and the ACA can afford it, then go right ahead. But first we should fix the unfairness already embedded in the system. She should call for allowing those who buy their own insurance to take a tax deduction -- at least up to $10,200 a year for an individual and $27,500 for a family. In other words, let's repeal the two-class system of health insurance, before we give extra tax breaks to those who are already favored with a tax exemption.

     Yes, it's a minor tax point. But it's important, because we're all supposed to be treated equally; everyone's supposed to be the same in the eyes of the law.


Barbara - said...

Morning tom. I fall in the latter category, however I can declare all those premiums on my taxes at the end of the year. Is this not true of everyone?

Anonymous said...

I don't know why you waste your precious time talking about Hillary Clinton. Word on the street is that she is nearing to be indicted for her email scandal (which was hacked by the Russians five times but thankfully no one, so we have been told, clicked on the perilous link).
I hope the witch goes to jail. Hillary has always been the worst thing for America and Americans.

Tom Sightings said...

Am I wrong? Fill me in ... how so, and where?

Tom Sightings said...

I mean, Barbara, am I wrong .... As for Anon., I can understand why some people don't like Hillary Clinton. But I think you're exaggerating, just a wee bit.

JudyC said...

You take deduction only if you itemize and if premiums are 7.5 percent (or 10 percent depending on your age) of adjusted gross income.

Tom Sightings said...

Yes, JudyC, thanks for the clarification. I knew that and guess I should have mentioned it. If you're over 65 you can itemize and take a deduction on medical expenses, includ. medical insurance, to the extent they exceed 7.5% of your income (or 10% if you're under 65). So if you make $40K a year, and you're 65 or over and you spend $5000 on medical insurance you can deduct $2000 from your income. Still a long way from an employee who gets the full $5000 tax deduction. Aren't taxes fun?!?

Anonymous said...

I tried to find the most unbiased reporting about Hillary Clinton and her current email scandal:

They are from Judicial Watch which currently has 20 lawsuits against Hillary to force the government to reveal all her emails under the Freedom of Information law. Natch, of course Obama has fought against them every step of the way. There is also a video from The Wall Street Journal interviewing the prez of Judicial Watch.

You decide. I already have my mind made up about Hillary. It may take months but the FBI will indict her.

Tabor said...

Clearly readers would rather talk about political passion than an important tax point. I think this reflects our basic problems in reaching consensus on any of our mutual problems.

Stephen Hayes said...

An interesting discussion. I always come away from this blog better equiped to deal with retirement.

Janette said...

Stinks, doesn't it. I would think that catering to the rich was not in her bag.
Why would she want to get rid of the Caddie tax? That makes no sense at all. I hope to never see health care as 7% of my income--but it may come to that.
Joe, Al, Bernie...somebody who is in touch with the working class---PLEASE step up!

#1Nana said...

I agree with you on the tax inequity. I was able to retire because I am debt free. I have very little to write off on my taxes, so we take the standard deduction. There should be some sort of tax credit for health insurance. I like Hilary too!

Anonymous said...

I don't think Hillary's idea about the ACA are what Bill meant by "mend it don't end it." I will probably end up voting for her anyway because it looks like the Republicans are not going to produce a viable candidate...sadly.

Kathy @ SMART Living said...

Hi Tom! I am a Hilary supporter but I also fall into that class where I pay for my own health insurance so I would like this to be something that is resolved. I will now use this information to communicate with her about something that is unequal treatment and hope that she can do something to change it. And BTW...what's with all the Fox News Parrot Heads? Can't they at least come up with a sensible argument against here instead of just spouting rhetoric that is being fed the conservative masses?