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Editor: Katharine Van Tassel
Akron Univ. School of Law

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Sunday, February 21, 2010

Reforming the Tax Treatment of Health Insurance Premiums

Janene R. Finley (Augustana College, Department of Accounting) & Amanda M. Grossman (Murray State University, Department of Accounting) have published Equity in Reforming the Tax Treatment of Health Insurance Premiums, 34 Seton Hall Legis. J. 1 (2009).  Hat tip to Paul Caron at Tax Prof Blog who provides this part of the Introduction:


This Article evaluates the inequities in current and proposed tax treatments of health insurance premiums, and proposes a potential solution to eliminate such inequities. Part II of this Article discusses the historical tax treatment of health insurance premiums. Part III describes the current tax treatment and analyzes its advantages and disadvantages. In Part IV, different proposed changes in the tax treatment of health insurance premiums are discussed, as well as the advantages and disadvantages of those proposals. Part V illustrates how the proposals fail to account for the inequity between single and family plans and sets forth a legislative alternative that rectifies this inequity. This alternative solution is a tax cap equivalent to the amount of the premiums paid for a single health insurance plan for employees, with the excess included in taxable income. Single individuals that pay for their own policies, including self-employed individuals, would be allowed to deduct from gross income the amount paid for a single health insurance plan or an equivalent amount if a family plan is purchased. Married individuals filing a joint return would be able to deduct an amount up to the value of two single plans. Finally, Part VI describes the proposed solution in terms of both equitable tax treatment and social policy.

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