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Tax Break Jeopardy

D.C. is a sinking ship and they are looking for money from anywhere and everywhere. Based on this from Bloomberg, the biggest target is employer tax breaks.

With $1 trillion in tax breaks on the line, the biggest ones are in the employer market.

The Congressional Research Service report found the biggest tax break is likely to be valued at $164 billion annually in 2014 and is on employer-provided health insurance, while employer-provided pensions are the second-biggest exclusion at about $163 billion, the newspaper said.

The study said the most that might be gained in additional tax revenue from eliminating tax breaks was $150 billion, because of political opposition and technical hurdles, the newspaper said.

"I'll take employee benefits for $500, Alex".

Tax deductions and shelters for health insurance started during World War II as a result of union pressure on Congress. With wages frozen, union leaders lobbied Congress to grant special tax breaks so employers could increase wages (in the form of additional benefits) without taxation.

Will this 70+ year tradition of providing group health insurance on a tax favored basis come to an end?

Stay tuned.

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