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Thursday, February 01, 2007
Bush's Health Care Plan and the AMT?
Brad DeLong has a question about Bush's health care plan as described in the SOTU speech:
A question. When George W. Bush said:
[Although we are adding the value of health insurance contributions by employers to the income subject to personal income and payroll taxes, we are adjusting things so that] families with health insurance will pay no income or payroll taxes on [the first] $15,000 of their income. Single Americans with health insurance will pay no income or payroll taxes on [the first] $7,500 of their income...
Did he mean, "But the Alternative Minimum Tax will still apply to all income reported on your W-2, plus the value of health insurance contributions made by your employer, with no adjustment for this new health deduction"?
This is a particularly interesting question in light of the fact that tax cuts enacted since 2001 have pushed more taxpayers into AMT liability. Will the same tactic be used to make Bush's health care plan appear cheaper than it really is?
(source Tax Policy Center, "The Individual Alternative Minimum Tax (AMT): 11 Key Facts and Projections")
Posted by Craig Jennings
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