The Friday Evening Dump

(one in a weekly series intended to shine some light on unsavory news being jettisoned from the White House and Capitol Hill right before the weekend)

Hey, do you remember when they told us that if we voted for McCain, it would mean that our health care benefits would be taxed? Well, it looks like they may be right.

The campaign ad was ominous: "John McCain would make you pay income tax on your health insurance benefits. Taxing health benefits for the first time ever."

So warned candidate Barack Obama less than a year ago. In ads and speeches, Obama went on to predict the horrific fallout of McCain's proposal: financial hardship and millions dumped from employer-provided health plans.

Today(ed.: Friday, June 10), spokesmen for President Obama are saying a tax on employer-provided health benefits wouldn't be such a bad thing after all.

Roughly 163 million Americans receive health insurance through their employer. While actually a form of compensation, the value of the employer's contribution to that insurance is not taxed under the federal income or payroll taxes.

So, in addition to being a hypocrite, Obama is only being as nefarious as McCain in implementing this effective tax hike, which if executed on a wholesale basis would result in a tax increase of $2.3 trillion over 10 years for all Americans who receive employer-based health care, right?

Uhhh… not quite. The McCain taxing of health care benefits was to shift the overall health care obligation from the employers to more of a free-market approach whereby individuals and families would be given vouchers funded by the tax to shop around for health care.

The Congressional plan that is doing the heavy lifting for the President is in a mad scramble to raise the $1 to $2 trillion of jack that will be needed to fund his “public option”. Just a little different, wouldn’t you say?

But since a tax on everyone’s health insurance plan is most likely a political non-starter, Congress will probably focus their tax sights on just the most generous of benefit plans. We’re looking at you, middle class.

Unfortunately, this elimination of tax exemption for just the above-average value health plans won’t nearly raise the amount of money to fund the public option. Investor Business Daily surmises only $165 bil will be raised in this manner so Congress will be required to root around and about for additional, ahem, revenue streams. Anyone up for a payroll tax, a value-added tax… an income tax surcharge?

Such wonderful news in the midst of the worst economy since the Great Depression, we’re sure you would agree.

Oh, and dig this, courtesy Innocent Bystanders