More details on bush's health care plan...

[6SpeedTA95]

There's more details now coming out about Bush's healthcare plan. This appears to be much better than I initially thought though I still do not like the idea of taxing the benefits in excess of 15,000 dollars.

However, the across the board tax incentive for insurance definately seems like a winner especially for anyone with a household income of less than 80k. There will be a significant tax savings for these individuals that must buy their own health insurance.

According to the wall street journal the exemption is just like a personal exemption so all families can claim the 15,000 dollar exemption and all individuals can claim the 7500 exemption regardless of what their insurance actually costs. This will do two things, it will help offset premium costs and the higher deductible costs per year. That is definately a good thing. This will also encourage individuals who have insurance at work to shop around and perhaps create huge incentives for insurance companies to plug directly back in with consumers. Something the market desperately needs.

A family making 60k/yr would save 4500/yr on taxes to put towards healthcare under this new plan. An individual making 40k/yr would get 2250 in tax benefits each year. This seems like a really good plan for the poor to upper middle class. The upper class look like they'd be left holding a slightly higher tax burden.

Under the current system tax subsidies for families making 100,000 dollars are 2780/yr. While a family mkaing only 30k gets a mere 725 dollars in direct tax aid.

This info came from the wall street journal page A12.

In summary this plan looks to be much better than initially reported and there's not really any real reason for democrats to not support it based on their history. I still dont like the idea of a tax increase on those making more than 100k a year.

[Diesel66]

Yahoo! Personal Finance

here is one big problem for the future.

Initially, only 20 percent of those who are covered through work will see a tax increase, according to White House estimates. But that number will go up over time, because while the deduction cap would be indexed to inflation, health care costs rise much more quickly. Hence, your plan costs could exceed the deduction cap within a few years of the cap's implementation, depending on your circumstance.

Ten years after the proposal is in effect, 40 percent of plans will exceed the standard deduction, according to a preliminary analysis of the proposal by the Tax Policy Center.

[Pro Street]

If you make 30k, and have 4 dependants, is the tax a deduction when you file or is it actually a deduction in the taxes as witheld?

I'm not so good at tax law, but if it's a yearly deduction, for a family that size who ends up with a slight refund every year it won't make any difference, it seems that it'll actually cost more since it's a deduction and not a credit.

someone help me out here understanding this.

[RMNIXON]

I like the fact that it does not force anyone to buy health insurance or pay into a government plan. That is what Gov. Arnold want to do in California. Mandate that employers and even indidviduals get their own insurance or pay into a State plan. You have an incentive, but no arm twisting.


But the Dems don't like either because it retains private health providers and Insurance. They want that part of the economy swallowed up by government so they can become their new dependents!

[6SpeedTA95]

Originally Posted by Pro Street

If you make 30k, and have 4 dependants, is the tax a deduction when you file or is it actually a deduction in the taxes as witheld?

I'm not so good at tax law, but if it's a yearly deduction, for a family that size who ends up with a slight refund every year it won't make any difference, it seems that it'll actually cost more since it's a deduction and not a credit.

someone help me out here understanding this.

You can do it either way...your ending tax bill would be lower, how you choose to take that money is up to you...


Diesel, thats a good point on indexing but they could 1) always adjust the indexing later and 2) much of the inflation in health costs are related a)to doctors having to carry very expensive malpractice and b)consumers (you and I) being detached from the monetary exchange process. This would change B and would make consumers more cost conscious and aware of the markets...by addressing B you make a huge dent in health care inflation and if the government fixes A then you have less inflationary pressure on the system.

Granted it still may go up faster than inflation but this would drastically help the situation...

[6SpeedTA95]

Originally Posted by RMNIXON

I like the fact that it does not force anyone to buy health insurance or pay into a government plan. That is what Gov. Arnold want to do in California. Mandate that employers and even indidviduals get their own insurance or pay into a State plan. You have an incentive, but no arm twisting.


But the Dems don't like either because it retains private health providers and Insurance. They want that part of the economy swallowed up by government so they can become their new dependents!

I think a lot of level headed democrats will like this plan, pelosi might not and clinton might not but many others will IMO.

[Diesel66]

Originally Posted by Pro Street

If you make 30k, and have 4 dependants, is the tax a deduction when you file or is it actually a deduction in the taxes as witheld?

file.

I'm not so good at tax law, but if it's a yearly deduction, for a family that size who ends up with a slight refund every year it won't make any difference, it seems that it'll actually cost more since it's a deduction and not a credit.

someone help me out here understanding this.

How so ? The current system is a deduction.

You make 50k and your insurance costs 7500. They take that money out before taxes and you only pay taxes on 42500.

New system
You make 50k and your insurance deduction is 7500. You pay taxes on 42500.

[6SpeedTA95]

Originally Posted by Diesel66

file. How so ? The current system is a deduction.

You make 50k and your insurance costs 7500. They take that money out before taxes and you only pay taxes on 42500.

New system
You make 50k and your insurance deduction is 7500. You pay taxes on 42500.

You dont see the difference?

Not matter what you now get to claim the max. So even if you're insurance is costing you 3k you get the full deduction which allows you to shop around for potentially better insurance.

[Diesel66]

Originally Posted by 6SpeedTA95

You dont see the difference? .

was only talking about the taxable amount.


If your insurance is cheaper, you get a bigger deduction
If your insurance is more expensive, you pay more taxes

[Pro Street]

so.. if the tax per check doesn't get any cheaper, and a family making 30k that gets about a $200 refund per year (as in my case).

Employers won't pay for insurance, and this will be a tax deduction... so I end up paying for health insurance (since they may not include it with this plan) and I the deduction means nothing in this case.

it seems as though I'd pay more under this plan, since I'd be paying the full cost of insurance and the deduction won't really be anything.

[6SpeedTA95]

Originally Posted by Diesel66

was only talking about the taxable amount.


If your insurance is cheaper, you get a bigger deduction
If your insurance is more expensive, you pay more taxes

You only pay more if the employer benefits are higher...just to clarify

[6SpeedTA95]

Originally Posted by Pro Street

so.. if the tax per check doesn't get any cheaper, and a family making 30k that gets about a $200 refund per year (as in my case).

Employers won't pay for insurance, and this will be a tax deduction... so I end up paying for health insurance (since they may not include it with this plan) and I the deduction means nothing in this case.

it seems as though I'd pay more under this plan, since I'd be paying the full cost of insurance and the deduction won't really be anything.

No, thats wrong...

No matter what since you have a family you claim the 15k deduction, just like a personal exemption so basically you would get back all your federal taxes assuming you make 30k.

[Kytro]

This is mostly for comparison purposes, health care in Australia (taken from wiki):

The program is now nominally funded by an income tax surcharge known as the Medicare levy, which is currently set at 1.5%. An exemption applies to low income earners. In practice the levy raises only a fraction of the money required to pay for the scheme. If the levy was to fully pay for the services provided under the medicare banner then it would need to be set at about 8%.

There is an additional levy of 1.0%, known as the Medicare Levy Surcharge, for those on high annual incomes ($50 000) who do not have adequate levels of private hospital coverage. This is part of an effort by the current Coalition Federal Government to encourage people towards private health insurance.

Also general tax rates:

Income Tax Rates 2003-04 [4]
Taxable income Tax on this income
$0 – $6,000 Nil
$6,001 – $21,600 17c for each $1 over $6,000
$21,601 - $52,000 $2,652 plus 30c for each $1 over $21,600
$52,001 – $62,500 $11,772 plus 42c for each $1 over $52,000
Over $62,500 $16,182 plus 47c for each $1 over $62,500

Income Tax Rates 2005-06 - excluding Family Tax Benefit[1]
Taxable income Tax on this income
$0 – $6,000 Nil
$6,001 – $21,000 15c for each $1 over $6,000
$21,601 - $63,000 $2,340 plus 30c for each $1 over $21,600
$63,001 – $95,000 $14,760 plus 42c for each $1 over $63,000
Over $95,000 $28,200 plus 47c for each $1 over $95,000

[Income Tax Rates 2006-07 - excluding Family Tax Benefit[3]
Taxable income Tax on this income
$0 – $6,000 Nil
$6,001 – $25,000 15c for each $1 over $6,000
$25,001 - $75,000 $2,850 plus 30c for each $1 over $25,000
$75,001 – $150,000 $17,850 plus 40c for each $1 over $75,000
Over $150,000 $47,850 plus 45c for each $1 over $150,000

[6SpeedTA95]

I find it funny that australia, a country with one of the better socialized medical systems in the world is trying to get people INTO the private sector.

[Kytro]

Originally Posted by 6SpeedTA95

I find it funny that australia, a country with one of the better socialized medical systems in the world is trying to get people INTO the private sector.

A focus of the current government. They be hard pressed to do so though because each year the premiums increase and make people less likely to take it up.

I have private coverage for peace of mind - choice of doctor, private room etc if I have to go to hospital.

edit: Holy bad spelling, batman

[TheScatman]

my problem is if the problem was caused in the first place due to the tax code (it gave employers an incentive to give out health care as opposed to cash wages) why keep tinkering with the code? the best solution would be a simple flat tax and let the market decide who is getting healthcare and the best way for it to be provided (via employers, purchased on your own, etc.)

It just digusting how much the tax code is distorting out economy

If central planners dont know what goods to produce, etc. how do they know what to favor in the tax code?

[Pro Street]

Originally Posted by 6SpeedTA95

No, thats wrong...

No matter what since you have a family you claim the 15k deduction, just like a personal exemption so basically you would get back all your federal taxes assuming you make 30k.

no... I won't.

I asked someone I talk to who's working for H&R Block. It's a deduction.. so if you don't end up owing any money at all, then the deduction isn't used.

i.e. 30k salary with a family of 5.

so unless you make enough to actually owe taxes, you're now going to likely end up paying full for health care under this plan, and won't get shit for it.


no thanks.

[6SpeedTA95]

Originally Posted by TheScatman

my problem is if the problem was caused in the first place due to the tax code (it gave employers an incentive to give out health care as opposed to cash wages) why keep tinkering with the code? the best solution would be a simple flat tax and let the market decide who is getting healthcare and the best way for it to be provided (via employers, purchased on your own, etc.)

It just digusting how much the tax code is distorting out economy

If central planners dont know what goods to produce, etc. how do they know what to favor in the tax code?

[6SpeedTA95]

Originally Posted by Pro Street

no... I won't.

I asked someone I talk to who's working for H&R Block. It's a deduction.. so if you don't end up owing any money at all, then the deduction isn't used.

i.e. 30k salary with a family of 5.

so unless you make enough to actually owe taxes, you're now going to likely end up paying full for health care under this plan, and won't get shit for it.


no thanks.

Yes thats correct, its a 15,000 dollar deduction for families.

If you already dont pay taxes of course there wont be a tax savings that wouldn't make any sense. How can you save money on something you're already paying zero on?

[hsmith]

you should be able to write off any health care costs, not just specific ones.