Obama Open to Baucus’ Idea of Taxing Health Benefits

It appears President Barack Obama is warming to the idea of taxing employee benefits to help pay for health care reform. The New York Times points out that the shift could be problematic for the president, since he basically blasted Sen. John McCain for proposing a similar plan, calling it “the largest middle-class tax increase in history.”

But Montana Sen. Max Baucus has advocated taxing health benefits, rather than eliminating tax deductions on the richest Americans, to pay for reform. And it appears the Obama administration is now at least receptive to the idea. <a href="http://www.nytimes.com/2009/03/15/us/politics/15health.html?ref=politics" title="From The Times“>From The Times:

When Senator Max Baucus, Democrat of Montana, advocated taxing benefits at a recent hearing of the Finance Committee, which he leads, Treasury Secretary Timothy F. Geithner assured him that the administration was open to all ideas from Congress. Mr. Geithner did, however, allude to the position that Mr. Obama had taken as a candidate.

The administration’s receptivity to the idea is owed partly to the advocacy of Mr. Baucus, whose committee has jurisdiction over tax policy and health programs, and to support from Republicans. There is less enthusiasm among Democrats in the House, though the health debate is at an early stage and no comprehensive plans are on the table.

Also, Mr. Obama’s own idea for raising revenues for health care — limiting the income tax deductions that the most affluent taxpayers claim — has run into opposition not only from Mr. Baucus but also from his counterpart in the House, Representative Charles B. Rangel, Democrat of New York, who is chairman of the Ways and Means Committee.

The idea of taxing health benefits has taken some heat in Montana this week. The Missoula Independent’s George Ochenski writes: “Proposal to tax health benefits makes no sense.” And Jay Stevens at Left in the West argues that support for the idea is based on the “faulty premise of ‘moral hazard.'”