Brief Limiting the Tax Exclusion of Employer-Sponsored Health Insurance Premiums: Revenue Potential and Distributional Consequences
Lisa Clemans-Cope, Stephen Zuckerman, Dean Resnick
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The exclusion of employer-sponsored health insurance premiums and medical benefits reduced federal tax revenues by $268 billion in 2011 alone-by far the largest federal tax expenditure. Moreover, the exclusion disproportionately subsidizes those with higher incomes. In this brief, we provide estimates of the revenue potential and distributional consequences of limiting the exclusion from income and payroll taxes at the 75th percentile of 2013 premiums, indexing by GDP. The policy would produce $264.0 billion in new tax revenues over the coming decade while preserving 93 percent of the tax subsidies available under the current policy.
Research Areas Economic mobility and inequality Health and health care Wealth and financial well-being Taxes and budgets
Tags Fiscal policy Health insurance Federal health care reform Health equity Private insurance Wages and nonwage compensation Federal budget and economy Income and wealth distribution Wages and economic mobility
Policy Centers Health Policy Center