Employers pay people to produce product. They must attract and retain the right people to maximize their profit. After all, companies don't offer benefits to their employees out of the goodness of their corporate hearts.
An employer has a theoretical $100,000 to spend on an employee. If the employer gives the employee the full amount, the compensation realized by the employee is $100,000 minus income tax. If the employer offers no other benefits, then all health costs for the employee are out-of-pocket - for our example, we'll say the employee spends $10,000. The employee pays taxes on $100,000, and spends $10,000 on health benefits.
If that same employer pays the employee $90,000 and spends $10,000 on health benefits, then the employee receives a higher benefit. They get $90,000, minus taxes, and a $10,000 health benefit, tax-free. Essentially, they get the same compensation, but don't pay taxes on $10,000 of it.
Read this over until you get it.
And where does that magic difference come from? The United States government. Those socialists!
As far as the subsidies, the point is that the corporations are using government money as a deduction. That's called double dipping. |
