Question
Health Care > Health Insurance > Health Insurance Coverage
Attack the tax code's bias favoring health insurance coverage against health costs
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Background
Employer-sponsored health insurance is a non-taxable benefit. On the other hand, healthcare costs are typically paid with post-tax money. Allowing individuals to deduct healthcare costs from their taxes would remove this taxation bias.
The United States is the only industrialized nation that does not provide universal health care.
The government covers a little over one-quarter of the population through healthcare programs for the elderly (Medicare), disabled (Social Security), military service families and veterans (Tricare and VHA), children (SCHIP), and the poor (Medicare). Federal law ensures public access to emergency services regardless of ability to pay. However, this unfunded mandate has contributed to a health care safety net that some analyses say is increasingly strained. Certain types of medical spending and particularly health insurance benefit from significant tax subsidies; in particular, employer-sponsored health insurance is a non-taxable benefit.
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A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. In everyday terms, this means that tax-deductibility increases a person's purchasing power (if the person is paying taxes), by ""adding money"" to the purchase that would have otherwise gone to taxes.
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Because tax deductions reduce taxable income, and taxes owed are a percentage of taxable income, then tax deductions offer a fractional reduction in taxes owed.
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Tax credits, on the other hand, come directly out of the taxes owed, saving the taxpayer one dollar for each dollar of credit. Tax credits may be characterized as either refundable or non-refundable, or equivalently non-wastable or wastable. Refundable or non-wastable tax credits can reduce the tax owed below zero, and result in a net payment to the taxpayer beyond their own payments into the tax system, appearing to be a moderate form of negative income tax. Examples of refundable tax credits include the earned income tax credit and the additional child tax credit in the U.S.
see more on Wikipedia
The United States is the only industrialized nation that does not provide universal health care.
The government covers a little over one-quarter of the population through healthcare programs for the elderly (Medicare), disabled (Social Security), military service families and veterans (Tricare and VHA), children (SCHIP), and the poor (Medicare). Federal law ensures public access to emergency services regardless of ability to pay. However, this unfunded mandate has contributed to a health care safety net that some analyses say is increasingly strained. Certain types of medical spending and particularly health insurance benefit from significant tax subsidies; in particular, employer-sponsored health insurance is a non-taxable benefit.
see more on Wikipedia
A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. In everyday terms, this means that tax-deductibility increases a person's purchasing power (if the person is paying taxes), by ""adding money"" to the purchase that would have otherwise gone to taxes.
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Because tax deductions reduce taxable income, and taxes owed are a percentage of taxable income, then tax deductions offer a fractional reduction in taxes owed.
see more on Wikipedia
Tax credits, on the other hand, come directly out of the taxes owed, saving the taxpayer one dollar for each dollar of credit. Tax credits may be characterized as either refundable or non-refundable, or equivalently non-wastable or wastable. Refundable or non-wastable tax credits can reduce the tax owed below zero, and result in a net payment to the taxpayer beyond their own payments into the tax system, appearing to be a moderate form of negative income tax. Examples of refundable tax credits include the earned income tax credit and the additional child tax credit in the U.S.
see more on Wikipedia
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