Tax break for employer health plans a target again

11-28-2010 • news.yahoo.com/s/ap

Employer-provided health insurance is part of a worker's compensation. Unlike wages, it isn't subject to income and payroll taxes. Repealing the tax break would raise several hundred billion dollars a year, depending on how it's done. Many economists believe employers would boost pay if they didn't provide health care. Proponents of repeal usually call for a tax credit to offset part of the cost of individually purchasing coverage. The leaders of Obama's deficit commission — Democrat Erskine Bowles, a former Clinton White House chief of staff, and Alan Simpson, a former GOP senator from Wyoming — have proposed to limit the tax break or eliminate it along with other cherished deductions, such as the one for mortgage interest. That would allow for a big cut in tax rates. The commission is supposed to report its plan on Wednesday. It's unclear if leaders have the votes to back their sweeping changes.