Daily Chart: Who Gets The Health-Care Tax Benefits?

It's perfectly fine to fisk the administration for backtracking on Obama's pledge not to raise taxes on anyone earning less than $250,000. Why? Because Obama's people now say they won't rule out taxing employer-sponsored health benefits. (As it stands, health benefits you get through an employer are not subject to payroll or income taxation. More here.) Additional fisking might be deserved here on account of the laughable defenses employed ("we're going to let the process work its way through," spins Robert Gibbs, to laughter), and because Obama spent a fair bit of campaign time knocking McCain for taking the position that the new president is now on the cusp of embracing.

Nonetheless, it's important not to lose sight of the fact that taxing health benefits to pay for health-care reform is a fantastic idea -- exactly the kind of thing that deserves a flagrant Obama flip flop. A lot of the debate over whether taxing health benefits would break Obama's $250,000 pledge suggests that the current tax structure benefits low and middle income families. (The name of the YouTube clip of Gibbs getting laughed at is "WH Won't Rule Out Tax Increase On Middle-Class.") But that isn't true: The current tax exclusion does benefit some low- and middle- class families, but most of the benefits are offered to high-income taxpayers with less need.

Here's the breakdown of benefits, by effective tax rate:

who gets ESI?.png

So, one's chances of being offered employer-sponsored insurance (ESI) increase fairly steadily with income. And note, in particular, the difference between those offered and those covered with a less than 10% effective tax rate. Just 35% percent of those workers receive any health tax benefits. This suggests that, even with the tax benefit, many low income families choose not to or cannot buy coverage.

(One final note: This chart shows only who is offered and receives coverage, not the value of that coverage. It would surprise exactly no one to know that, in addition to receiving coverage more frequently, wealthy taxpayers also receive coverage that is more valuable. I don't know where to find that data. All of the above numbers are drawn from the wonderful Tax Policy Center.) 

Presented by

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism. He was previously a fellow at The Atlantic and an editor at The Guardian. More

Conor Clarke is the editor, with Michael Kinsley, of Creative Capitalism, an economics blog that was recently published in book form by Simon and Schuster. He was previously a fellow at The Atlantic and an editor at The Guardian. He is also on Twitter.

Why Principals Matter

Nadia Lopez didn't think anybody cared about her middle school. Then Humans of New York told her story to the Internet—and everything changed.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus


A History of Contraception

In the 16th century, men used linen condoms laced shut with ribbons.


'A Music That Has No End'

In Spain, a flamenco guitarist hustles to make a modest living.


What Fifty Shades Left Out

A straightforward guide to BDSM

More in Politics

Just In