What Max Sawicky misses is that Bush is proposing to use the money raised to finance not a tax credit but yet another deduction--or so his people are saying:
MaxSpeak, You Listen!: BUSH'S NEW TAX: I haven't seen much detail on the president's health care proposal. It looks like a new way of dumping more money into the individual health insurance market. In other words, by undermining risk pooling, it contributes to the "death spiral."...
The financing piece is noteworthy for a couple of reasons. First, lo and behold, there is a pretense of revenue neutrality. (Whether it is or not will have to wait for verification by honest persons.) Second, it is a new tax on [health insurance] policies above some cap. $15,000 [a year] for families was the number floated.... Why would anyone want to do this?
One plausible excuse is that an unlimited exclusion increases demand for health insurance and raises prices. The price increase pushes some people out of the market into the ranks of the uninsured. I don't know if this is true, but it could be.
A second is that all of the deductions in the income tax are fair game, in light of expected revenue needs. To get more dough, the first priority is to broaden the tax base. First on my list would be including all interest, dividends, and capital gains. Second would be capping or eliminating other deductions.... Each of these deductions is like a big spending program... available with little or no documentation or auditing.... [A]ll [deductions] be subject to scrutiny.
For the sake of fairness, simplicity, and revenue, deductions should be consolidated, capped, and turned into credits. On the merits, that is the most important angle to the Bush proposal -- breaking the ice on tax expenditures.