> The real scam is when things like health insurance premiums are deductible for a company but not for an individual.

To be fair, that this "scam" is still alive today is mostly by accident.

It stems from WWII times, when stateside laborers were uniquely low in supply and high in demand, and when labor had ridiculous bargaining power.

Laborers couldn't really ask for higher wages, because that was politically impossible (appearing to be extorting wartime needs for money was/is a faux pas).

So companies began competing on "benefits": health, accidental death and disability insurance among them.

To help ease the burden on employers and employees, the IRS allowed businesses to "temporarily" deduct insurance premiums. (This relief came against the backdrop of unprecedented wartime tax hikes).

Postwar, it was unfeasible to remove this measure, as the majority of Americans who had insurance got it through their employers: it would upset both businesses who have to pay more, and employees who lose insurance.

Later, some government (I forget which...) signed this stopgap measure into the tax code, making it permanent.

Regardless of the interesting history, I agree with you, it should be universally deductible.

>> Laborers couldn't really ask for higher wages, because that was politically impossible

Not just politically impossible, illegal:

>> World War II disrupted those trends. As demand for everything — particularly labor — climbed, Congress passed the Stabilization Act of 1942, which allowed the president to freeze wages and salaries for all the nation's workers. A day after its passage, President Franklin Roosevelt issued an executive order invoking these powers, which applied to "all forms of direct or indirect remuneration to an employee," including but not limited to salaries and wages, as well as "bonuses, additional compensation, gifts, commissions, fees."

But there was an exemption of massive proportions slipped into a fateful clause: "insurance and pension benefits" could grow "in a reasonable amount" during the freeze."

- https://www.chicagotribune.com/opinion/commentary/ct-obamaca...

And, relevant to today's discussion:

>> By slapping corporations with tax rates of 80 or even up to 90 percent on any profits in excess of prewar revenue, Congress all but guaranteed a frenzied search for loopholes.

Also interesting to note that the change in question wasn't a switch from workers paying for their own health insurance to it being paid for by employers. Prior to WW2 less than 10% of Americans had any form of health insurance, by the end of the war it was close to 30%.

> Regardless of the interesting history, I agree with you, it should be universally deductible.

I’m for it being universally not deductible. Or at least not deductible for corporations.

The idea is that it forces everyone onto a common public individual market as there would be no tax or cost advantage of corporations to self-insure or provide insurance.

Longer term this gives better mobility to workers and lowers costs of the individual market by bringing in 100M+ healthy people (which lowers the average risk weight cost of insurance).

Interesting idea.

If it were not deductible for anybody, fewer people would have health insurance. If you're in that pool, it's good for you, because it would probably be cheaper. But fewer people would be insured, so it's overall bad, right?

Am I'm missing some part of your argument?

The idea of making it universally deductible/subsidized for individuals seems to be the path that we're on right now.

Case 1: If you purchase health insurance on the exchange, and are very poor, you can get fully-subsidized plans. (Not to mention if you qualify for medicare).

Case 2: The most plausible proposals of "Medicare for All" are basically expanding the pool of people who qualify for zero-premium medicare advantage plans. This keeps insurance individualized and operated by private companies to maintain quality improvements driven by capitalistic-competition, although the government is the ultimate payer.

Case 3: the government (yes, even the current administration) has taken several steps to encourage employers to subsidize the costs of employees purchasing insurance individually, rather than as a group [see https://www.takecommandhealth.com/ichra-guide].

Aren't health insurance premiums deductible for individuals too?

"If you bought medical insurance policies on your own for yourself or your family, you might qualify for a self-employment tax deduction on the premiums." [1]

"If you are enrolled in an employer-sponsored health insurance plan, your premiums may already be tax-free. If your premiums are made through a payroll deduction plan, they are likely made with pre-tax dollars, so you would not be allowed to claim a year-end tax deduction." [2]

[1]: https://www.nerdwallet.com/article/taxes/self-employment-tax... [2]: https://www.investopedia.com/are-health-insurance-premiums-t...

I'm confused. What's the difference between a "tax deduction" and paying with "pre-tax dollars"?

Do they mean if for example a company pays $5000/year in employee insurance, they can subtract $5000 from their tax bill? If so, that's a tax credit right?

As I understand it, a "tax deduction" is a deduction on taxable income (in the case of an individual) or profit (in the case of a company).

You are right, pre-tax dollars is the same as tax deduction. But for self-employment (the first point), there are more conditions, and people might be out of luck. For example if you could be insured by your spouse's employee based insurance, and you choose to buy your own insurance.