That's the single largest tax loss expenditure on the list of tax loss expenditures.
Adding health insurance benefits for employees was a WWII era work-around to FDR's anti-capitalist wage controls, instituted to curb inflation.
When too many were unavailable to do the work because they were off fighting the war, the price of work sky-rocketed. Adding untaxed health insurance benefits helped employers attract and keep workers during wartime.
The untaxed health insurance benefit was & remains tax-free compensation, estimated as today's single largest tax loss expenditure at $500 billion/year.
But Biden's national policy director for his 2020 campaign goes off on a $20m CEO because high compensation earners are the easy target she only pretends are the problem instead of the one you see in the mirror every morning not paying taxes on everything you make.
She needs your votes for the public option, and isn't going to get them by telling you the truth.
The public option, to be sure, would have been superior to the Obamacare Rube Goldberg machine, and is clearly preferable to Medicare For All because the latter would end employer-provided health insurance.
But as with FDR it's still not capitalism, and if you push here something is going to pop out over there and become a problem. The iron laws of supply and demand will always assert themselves, but with capitalism the consequences are immediate, severe, and self-correcting by the market.
If you tax health insurance benefits, you will simply get less health insurance of the kind we have, accompanied by more cries for options from the marketplace for the health insurance we don't have, which if free to provide them . . . will.
Meanwhile a comprehensive federal income tax reform taxing all income at high rates above $102,230 for a single filer and $136,306 for married filing jointly as of June 2026, and at 0% below, is the place to start to reimagine fairness in the United States.
84% of individual earners made less than $100,000 in 2023. The vast majority of them would not notice that an average of $9,500 of employer provided health insurance was being counted as income under the new threshold of $102,230 because they would owe zero taxes anyway.
We need more reality in economics and less fiddling with it, and certainly none of what Abdul is selling, which will require taxing everybody, not just the rich, much more. He is selling "free at the point of care", but nothing is free. Nothing.
