President Bush will propose a tax deduction of $7,500 for individuals and $15,000 for families regardless of whether they buy their own health insurance or receive medical coverage at work, according to published sources.
The proposal, to be announced Tuesday in his State of the Union address, has a two-fold purpose: reducing the cost of healthcare insurance for most Americans and providing an incentive for the uninsured to buy a policy.
While administration officials say the changes will not affect total tax dollar collections, the publish reports are unclear as to whether the traditional exemption for employers who pay for healthcare will continue. At present, employers can deduct the cost of healthcare insurance for employees dollar-for-dollar.
Employees with policies costing above the $7,500 and $15,000 limits would pay taxes on the excess. Individuals and families, who purchase healthcare insurance directly would, for the first time, have some tax relief.
In his radio address, the President said the measure is also aimed at giving the uninsured an incentive to purchase a medical plan.
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What is clear is that this new initiative changes the face of healthcare discussions for the next two years.
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