FAIRTAX TREATMENT OF INSURANCE IV

This is the last day for the insurance thing. I will cover health insurance and then sum everything up at the end and be done with it. For more indepth info, go to FairTax.org and check out the white papers under Research.

Health Insurance:

Income Tax:

Premiums for health insurance are treated differently, depending on who purchases the insurance. If you as an individual, purchase it, the insurance is paid for with after-tax dollars and not deductible.

If you are pay part of the premium for insurance through your employer, it is not deductible unless your employer establishes a Section 125 Plan, in which case your portion is paid for with pre-tax dollars, thus reducing your future Social Security benefit.

Because of the tax preferences in the income tax code, almost all health care is purchased by employers and the government. This removes flexibility, control, and cost awareness from the consumer.

FairTax:

Since the FairTax taxes all new goods and services one time, your health insurance premiums are taxed, but the charges billed to the insurance company by the doctor are not taxed. This avoids double taxation. If the insurance benefit is paid directly to you, it includes the insurance credit to prepay any taxes due as the benefit is spent.

If you purchase health care services directly from the doctor, such as co-pays or deductibles, the charges are taxable.

From the doctor’s perspective, the FairTax removes the cost of payroll taxes, income taxes, self-employment taxes, the cost of administering income tax withholding and payroll tax deductions for his/her employees, and personal income tax, payroll tax and compliance costs.

This allows the doctor to charge less for his/her services. It allows for the consumer to pay his/her lower-cost premiums with pre-tax dollars.

Summary of the benefits of the FairTax to the insurance industry and consumers:

• The pre-tax cost of insurance should drop as embedded taxes and compliance costs are removed.
• The average American takes home 100% of their paycheck.
• Only the risk component of cash value life insurance is taxed.
• Cash values of both annuities and life insurance contracts grow and can be withdrawn tax free.
• A credit insures that all insurance benefits are consumed tax free.
• Death benefits are both income and estate tax free and include a credit to insure they aren’t taxed when spent.
• Health insurance benefits are tax free.
• Natural markets are restored to the purchase of health insurance, helping to control and even lower future health care costs.
  
  There, I’m done. Can you see how tied-down we are by the present income tax system? Can you see how much more free we will be when Congress passes bills H25 & S1025?
  Call, write and beg your congressmen to sign on supporting the FairTax ASAP.