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The Kids Are Alright

But they'd be alrighter if someone would tax employer health benefits already. Or so says Dylan Matthews over at Campus Progress. He doesn't go into this, but the young actually do have an interest in eliminating or capping the employer health-care exclusion: They're less likely to be employed at workplaces that offer health-care benefits, much less lavish ones. As such, the employer tax exclusion is, in part, a subsidy from the young to the old.

By Ezra Klein  |  July 23, 2009; 2:52 PM ET
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"They're less likely to be employed at workplaces that offer health-care benefits, much less lavish ones. As such, the employer tax exclusion is, in part, a subsidy from the young to the old."

I think this comepletely misses the point. I could go on and on with deductions that meet the general young-to-old subsidy (pension plan contributions, mortgage interest, FICA taxes). There are just tons of tax expenditures that benefit those that are relatively older. I guess my point is that you shouldn't just pick on health care if you are going to look at distortionary impact of certain taxes.

Posted by: charlesjohnford | July 23, 2009 3:21 PM | Report abuse

Further, even if they are lucky enough to be compensated in part through tax-free health benefits, this compensation level will be set at a uniform rate throughout the company, meaning that younger/healthier people will still be compensating the old/unhealthier co-workers. On top of Social Security, Medicare, and the massive current deficits that will be financed by higher tax rates on future workers (i.e. today's young people), the old are totally screwing over the young.

Posted by: Dellis2 | July 23, 2009 3:28 PM | Report abuse

the old are totally screwing over the young. That's how it's always been. The boomers screwed us (Gen X)and we're screwing the next gen. They'll get their turn too and they better get used to it, because it's going to be a lot worse for them. And no I don't care. We pay enough taxes in this country.

Posted by: obrier2 | July 23, 2009 3:35 PM | Report abuse

Of course, that does not apply to 5 young people I know pretty well.

Posted by: sailor0245 | July 23, 2009 3:45 PM | Report abuse

why are we keeping the whole employer thing in the first place? Isn't it a terrible model?

And now you have a 'penalty' per employee if you don't offer health insurance? how does that really play out?

Seriously? What if I don't need health insurance cause I'm insured under my husband's plan? And I get a job, but I don't care if they offer insurance or not. Does the employer STILL have to pay a penalty? Why should he/she? Otherwise, I'd be ensured twice...
And if they *don't* have to pay the penalty, wouldn't they then just want to hire people who are already covered?
Or is the congress going to pass a law that says ONLY the employee gets to be covered? Screwing over spouses? Or screwing over children? And how old would employees have to be to be for the employer to have to pay the penalty? 16? but not all 16 YOs it's absurd.

Posted by: atlmom1234 | July 23, 2009 4:25 PM | Report abuse

And, yes, I do think they should tax employer benefits such as health care. It (sort of) makes sense.
I say sort of because our whole tax system is absurd. And they keep making it more difficult to understand, costing people more and costing companies more (no wonder companies are moving overseas).

Posted by: atlmom1234 | July 23, 2009 4:26 PM | Report abuse

The young will still be subsidizing the old if we get health reform passed. That's one of the things the individual mandate is about. Even if we had single payer with no individual premium, the young would most likely be doing the subsidizing, depending on the wages they make. It is the healthy subsidizing the sick, but since the young are healthier...
If we have a more efficient health care system, they'll get more bang for their subsidizing buck though. Not to mention health care if they get sick.

Posted by: Hazelite | July 24, 2009 10:43 AM | Report abuse

"As such, the employer tax exclusion is, in part, a subsidy from the young to the old. "

EMPLOYEE tax exclusion, not EMPLOYER. It's incredibly disingenuous rhetoric to keep repeating this nonsense in order to tap into anti-corporate mania. It's the employee that's not being taxed on the benefit.

Regardless, we need a limit on demand...

Posted by: staticvars | July 24, 2009 1:04 PM | Report abuse

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