Tax policy is at the core of the provision of employee benefits, which currently
enhance the economic security of over 200 million Americans.
The special tax treatment of benefits has come under scrutiny for many reasons over the
years, with recent debates dominated by several arguments. Present incentives that focus
on employee benefits provision through employers and unions are argued for on the basis
that they have been successful in bringing benefits to over 70 million workers and their
families. Proponents argue that what is needed is simplification, not repeal or
replacement. One argument for change is that there should be no tax preference in the
absence of a mandate that all workers receive identical treatment and benefits. Another is
that the tax advantage should go directly to the individual and should not require any
employer or union involvement. Still another argument is that the tax benefits should be
targeted to low and middle income taxpayers, with limited or no tax incentives for higher
income workers. One last argument is there should be no tax preference for employee
Whether tax reform is radical or marginal, if it affects health and retirement
programs, it affects over 200 million Americans and their economic security.
The papers contained in Tax Reform: Implications for Economic Security and Employee
Benefits come from multiple perspectives including labor, employer, consultant, actuary,
and lawyer practitioner. They make many points that will be controversial and agree on
only one overall point: the end of tax incentives would reduce health insurance coverage
and pension provision. The authors express widely different views on whether the change
would be good or bad for the nation and for individuals.