Reagan's Tax Proposals

It's time for lawmakers to bite the bullet on tax reform and begin taxing at least some of the insurance given to employees, which is a disguised form of extra income. Employers then deduct this cost from their taxes and add it to their cost of doing business.

Neither party, of course, complains, but the result has been increased demand for medical and dental services accompanied by spiraling costs for all goods and services. Everyone pays for this "free" benefit in the form of higher prices, declining exports and job losses due to increased imports. Job seekers are more interested in insurance programs than in entry pay or advancement opportunities.

Social Security payments to retirees holding "tax-free" municipal bonds have been reduced and Medicare benefits for all oldsters have been reduced. By law, a waitress pays taxes on her gratuities and a gambler pays taxes on net winnings that are difficult to trace and assess. These efforts to tax persons who are not working for a decent paycheck have resulted in a lot of publicity but relatively small impact on the budget deficit.

The untaxed income paid out for health and/or life insurance, however, would affect virtually all paychecks and could be taxed on the basis of actual costs incurred. The costs of other fringe benefits are difficult to ascertain and vary between industries. Fringe benefits comprise well over 25% of a worker's paycheck and insurance is a big ticket item.

Now is the time for legislators to tell high salaried executives, insurance lobbyists and labor leaders that citizens of all ages and levels must give up one of their favorite loopholes to achieve an equitable tax reform. Let's reduce the budget deficit by taxing "free" health insurance as a minimum change.


San Clemente

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