Kevin Drum on healthcare and the tax break delusion

Adding to the steady denunciation of tax breaks as vehicles of government policy is Kevin Drum’s Monday article over at Mother Jones.  He writes about Ezra Klein writing about the Stupak Amendment; they’re both pointing out that the current treatment of employer-provided healthcare as tax exempt income is in fact a subsidy.  One suspects that if Republicans and Democrats were actually serious about the federal government not funding abortion, they would get rid of this subsidy.  Of course, logic won’t prevail for two reasons: one, our ideology doesn’t tell us to see tax credits as subsidies (government expenditure), and two, our leaders are looking for cheap acts to demonstrate their bona fides.

Money quote from Drum again making the point that tax credits are government expenditure:

But aside from the iron hand of path dependence, there’s another dynamic at work here: most people simply refuse to view tax breaks as the equivalent of federal subsidies.  But in most cases they are.  In the case of health insurance, the employer tax break means that workers whose employers offer insurance pay less for coverage than they otherwise would.  Likewise, subsidies mean that workers whose employers don’t offer insurance pay less for coverage than they otherwise would.  The differences between the two are slight.But nobody who gets a special tax break sees it that way.  So we continue to pretend.