Tax Errors

We really enjoy Holman Jenkins at the WSJ.  He is almost named after a local town and he is not afraid to say what he thinks.  We generally like his article today called Semi-Accidental President.  We are not big fans of The Donald but we voted for him because he is better than his predecessor and better than the alternative (Herself).  Without being very good he looks good despite his faults.

In one sentence, unfortunately, Holman said he didn’t understand taxes:

 All the other handouts that 71% of Americans depend on—Medicare, expanded Medicaid, the giant tax deduction for employer-provided insurance—will remain intact.  [Emphasis added]

The tax benefit for employer-provided insurance (EPI) is that it is not income to the recipient.  There is no reasons, except politics, to stop EPI from being a tax deduction.  EPI is compensation for the employee for work done.  Just like wages or pensions, EPI is an expense for the employer in the current period.  EPI should be income for the employee because the tax code says:

Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

(1)

Compensation for services, including fees, commissions, fringe benefits, and similar items;

Notice that the Code specifically identifies fringe benefits as income.   EPI is not income because of a wartime exception and that is the problem.  If EPI was taxable income then most of our health care problems could be solved.

Interesting articles become clunky where there is a glaring error like that.  We think he is very close to right on The Donald as president.  He will be an improvement even if that is faint praise.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s