May 31, 2013
A recent Senate Finance Committee white paper lists a number of options for reforming the single largest tax expenditure in the tax code — the exclusion from income of employer-sponsored health insurance. The options for reforming the tax treatment of health insurance are similar to alternatives suggested previously by various commissions, groups, and think tanks. Specifically, the white paper suggests several alternatives:
In addition, several significant changes to the Affordable Care Act are posited, including: moving up the effective date of the excise tax on high-premium health insurance plans; extending to part-time employees the requirement that employers provide health insurance to part-time employees; and repealing the ACA employer penalties. Meanwhile, the paper also suggests changes in the tax treatment of executive compensation, including: revisions to, or repeal of, the deductibility of executive compensation; imposing a special tax on the investment earnings attributable to non-qualified deferred compensation; and repealing the limitations on employer's deducting excess parachute payments. Although the white paper is simply a list of options the Senate Finance Committee may consider as tax reform moves forward, the fact that the proposals are being discussed at an early stage significantly increases the likelihood that they may be part of any reform effort.