How To Undermine Your Own Argument - The American Spectator | USA News and Politics
How To Undermine Your Own Argument

While it’s nice that the Washington Post editorial board has backed President Bush’s tax changes for health insurance, unfortunately they can’t do so without first taking a swipe at health savings accounts (HSAs):

THIS TIME last year, President Bush’s main health policy proposal was to expand tax-sheltered health savings accounts. In the days leading up to tonight’s State of the Union address, he has signaled a welcome shift in policy. Expanded tax shelters for health savings accounts would have drained billions of dollars from the budget, and the shelters would have mainly benefited the affluent. Their legitimate goals — to correct the tax bias against people who don’t work for big companies and to discipline health costs — would be far better advanced by Mr. Bush’s new initiative, which is budget-neutral and progressive. [Italics mine.]

But if you read carefully, you’ll notice that in the very next paragraph they undermine their case against HSAs:

At present, people who get health insurance from employers pay no tax on the value of the benefit. Someone with a marginal tax rate of 35 percent and a generous insurance policy worth $20,000 a year gets a $7,000 tax break. But people who buy insurance on the individual market must usually do so with post-tax dollars, so their tax break is normally zero. The administration proposes to eliminate that unfairness by giving salaried workers and freelancers the same tax deduction. [Italics mine]

There is one exception, however, to the lack of a health insurance tax break for individuals: HSAs. Far from making things better only for the wealthy, HSAs help level the playing in that those with individual health insurance policies. Those who buy individual policies with an HSA can get a tax break on the money they contribute to the HSA. Obviously this doesn’t completely level the playing field as they still pay taxes on the premium. But before HSAs, there was no tax break for individuals at all. Expanding HSAs would have given individuals an even larger tax break, thereby leveling the playing field even more.

Since the rest of the Post’s editorial goes on to praise Bush’s proposal to limit the amount of health insurance that can qualify for the tax credit, it’s worth noting that HSAs were ahead of the curve in that area too. The amount that can be put into an HSA is limited to about $5,000 per year. This is another way in which HSAs leveled the tax the playing field in that with traditional insurance in that the tax deduction the wealthy could take was unlimited.

It would be nice if the opponents of HSAs would acknowledge some of their virtues. I won’t hold my breath, however.

Sign up to receive our latest updates! Register

By submitting this form, you are consenting to receive marketing emails from: The American Spectator, 122 S Royal Street, Alexandria, VA, 22314, You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Be a Free Market Loving Patriot. Subscribe Today!