If it is a benefit, how does one measure how much of it is used for which it to be taxable benefit *for the recipient of the benefit*?[/quote]
You measure it by what it’s costing the employer to provide the benefit.
For example you employer may pay $2000/mo in premium for your family’s health care coverage. That’s $2,000 in compensation to you.
Currently because the benefit is untaxed, the value to you is $2,857 = 2000/(1-.30) Assuming your tax rate is .30.
Assuming you could buy the same coverage on your own, you would be indifferent if the employer provided you the $2,000 in health insurance plan or $2,857 in additional salary.[/quote]
Are you familiar with group health insurance costs for small employers, out of curiosity?
Specially,
(a)suppose you had a company A of 60 people, with half being 45-50 years old, some perhaps with pre-existing condition (lets say 5 are considered obese 5 have heart condition, and 1 with ongoing cancer treatment) and the remaining being under that age.
(b)suppose you had company B of 60 people, with all employees being 25 years old.
Want to take a guess on what sort of group premiums company A would be paying versus company B?
Still think the health “benefit” would be the same at the same dollar amount? Still think if the employers match the benefits to be competitive in employment, that the premiums paid would be the same? Do you still think employees of company A should be taxed more than company b for their health benefit? What do you think this does to Company A’s competitiveness in retaining talent versus Company B?
