The Truth About McCain And Insurance Taxes

(CBS)  It's one of the most explosive and important political charges of the election: "He wants to tax your health benefits," Barack Obama said.

Obama's charge was that that John McCain wants to tax the health insurance benefits Americans buy through employers, CBS News correspondent Wyatt Andrews reports.

"That's a $3.6 trillion tax potentially increase on middle class families," Obama said. "That will eventually leave tens of millions of you paying higher taxes."

John McCain wants a multi-trillion dollar tax on the middle class? Here are the facts.

Obama has the tax part correct, but the impact on the middle class is exaggerated - most people will see tax cuts.

McCain has proposed to end one of the largest tax breaks in the entire economy. Some 60 million Americans buy health insurance thru employers tax-free, and McCain would indeed begin to tax the value of the benefit.

However McCain also proposes to give the money back as a tax credit, $2,500 for individuals, $5,000 for families.

"Let's give them a $5,000 refundable tax credit to go out and get the health insurance of their choice," McCain said.

"It's mostly a tax break," said Len Burman of the Tax Policy Center.

The non-partisan tax policy center says except for the very richest Americans, most people buying insurance will see a tax cut.


"Families at all income levels would pay lower taxes, at least on average," said Burman. "On average, is about a $1,200 tax cut in 2009."

On the issue of energy, meanwhile Gov Palin touts her energy expertise based on Alaska's production.

"My job has been to oversee nearly 20 percent of the U.S. domestic supply of oil and gas," she said.

Here are the facts: According to the Energy Department, Palin's numbers are high.

Alaska provides 14.3 percent of America's crude oil, and only 2.6 percent of it's natural gas. You can check out the Energy Information Administration statistics here.

On the health care debate, the Obama campaign tells CBS News that one day, the middle class will be hit by a McCain tax increase - but the experts CBS News consulted said that day is 10 years away.

[pghmike5]

You missed the boat on this one. McCain will tax my *group* health insurance benefits, but give me a tax credit for buying individual insurance benefits.

Now, in my home state of Pennsylvania, there is *no limit* to how much an insurer can raise my rates if I become ill, if I have an individual policy. So, if someone becomes ill in this state, and they''re stuck with an individual policy, they''re effectively thrown out of their plan by seeing their premiums go up by high multiples.

McCain, like most Republicans these days, simply want to save money on tax deductions that help normal workers, so that they can give more tax breaks to the wealthiest.

[pghmike5]

You missed the boat on this one. McCain will tax my *group* health insurance benefits, but give me a tax credit for buying individual insurance benefits.

Now, in my home state of Pennsylvania, there is *no limit* to how much an insurer can raise my rates if I become ill, if I have an individual policy. So, if someone becomes ill in this state, and they''re stuck with an individual policy, they''re effectively thrown out of their plan by seeing their premiums go up by high multiples.

McCain, like most Republicans these days, simply want to save money on tax deductions that help normal workers, so that they can give more tax breaks to the wealthiest.

[pghmike5]

You missed the boat on this one. McCain will tax my *group* health insurance benefits, but give me a tax credit for buying individual insurance benefits.

Now, in my home state of Pennsylvania, there is *no limit* to how much an insurer can raise my rates if I become ill, if I have an individual policy. So, if someone becomes ill in this state, and they''re stuck with an individual policy, they''re effectively thrown out of their plan by seeing their premiums go up by high multiples.

McCain, like most Republicans these days, simply want to save money on tax deductions that help normal workers, so that they can give more tax breaks to the wealthiest.

[fti9999]

This is so dishonest regarding the healthcare, because you lose your employer healthcare coverage. So, McCain tells my employer, you don''t have to pay anymore. So I have to buy a health care plan at $7000 and McCain sends me $50000. However, I had to pay income tax on the $7,000 which effectively makes it 1,750 in tax @ 25% rate. So I am short $2,000 for the policy and $1,750 for the additional income tax.

However, even more important is that there is an admission that McCain is raising some peoples taxes.

And I thought that he was not going to raise my taxes. Now that''s straight talk.

[fti9999]

This is so dishonest regarding the healthcare, because you lose your employer healthcare coverage. So, McCain tells my employer, you don''t have to pay anymore. So I have to buy a health care plan at $7000 and McCain sends me $50000. However, I had to pay income tax on the $7,000 which effectively makes it 1,750 in tax @ 25% rate. So I am short $2,000 for the policy and $1,750 for the additional income tax.

However, even more important is that there is an admission that McCain is raising some peoples taxes.

And I thought that he was not going to raise my taxes. Now that''s straight talk.

[oleander8]

Little ole me isn''t going to have the same bargaining power with the insurance companies when it comes to the rates I will pay, as my employer will. This proposal is money in the insurance company coffers.

[oleander8]

When people talk about a Democrat control congress - they never mention that a majority of one or two can still tie their hands when trying to pass legislation that George Bush can''t veto. It takes a two-thirds majority to override a veto.

[wendymn64]

This story is *** who ever wrote it did no fact checking at all. If you had to buy your own insurance as an individual you would pay alot more then the small tax credit McCain is purposing. So what would happen is you would have to go with less coverage. And guess what I work for a small business and this would not help us at all. How about making insurance companies quit raising their rates. Or how about free health care?

[bawill1]

When are folks going to just realize that the government can''t afford all these programs?
No way a small portion of the population can pay for all of it and to then expect there to actually be any business offering many good paying jobs.
Want to stick it too big business with higher taxes? Well, the US already has the 2nd highest tax rate in the world on them, throw in all the mindless regulation and it''s a pretty easy answer as to why companies are going elsewhere where they are lowering taxes and making it attractive.
You folks keep pushing for a government hand out and insisting that someone else owes you health insurnace at no cost to yourself and your going to get stuck with nothing in the end due to it and paying more for it. Sounds familiar.
You will not get anything from Obama. 95% of the people are going to get a tax break? Give me a break with all the stuff he wants to put in not to mention all the other talk that has gone on for months. Like repealing and just letting the current tax cuts expire. Someone has to pay for all of it, and when business can''t, folks lose jobs.
We''ve just become too stupid in the US, we can''t even look out for our own best interest because there''s something out there that someone will complain about. Rest of the world is laughing and just shaking there heads in disbelief.
We might as well just give in and turn over all our wealth and wages to the government. I''m sure Obama can dole it back out to everyone.

[chakotay3]

gretagreen

Oh you got it alright! All McCain or any other Republican cares about is the wealthy and the big corporations. He would love to destroy Social Security and all other programs that only help the ordinary person so that the big corporations can really skin us alive!

What this country needs is universal, single-payer health insurance with the entire nation as a risk pool. And kick the bloated, fatcat insurance companies out of the game! And their overpaid, overperked CEOs and top executives too! A pox on all their houses!