Reform the Tax Treatment of Health Insurance

Background: With the outbreak of World War II, the federal government imposed wage and price controls on employers to prevent them from raising wages to attract a shrinking available workforce. To address this compensation problem, the Internal Revenue Service (IRS) issued a major rule that health benefits would be treated as compensation just like wages, but with a crucial stipulation: This form of employee compensation, unlike wages, would be tax free for both employers and employees. The result: health insurance at work enjoyed an enormous tax advantage compared to any other type of insurance, and employer-sponsored health insurance became the prevalent form of health insurance coverage.

Briefs

Reform the Tax Treatment of Health Insurance

Background: With the outbreak of World War II, the federal government imposed wage and price controls on employers to prevent them from raising wages to…

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