Each year Ametica "spends" $105 billion in tax deductions for employee benefits. The deductions cause the tax rates for all taxpayers to be higher than they otherwise would be. The justification is that federal policy should encourage health insurance, retirement pensions, disability insurance, day care, etc. Yet this tax subsidy is highly arbitrary and inequitable. In general, the tax law favors employees of large firms and higher-income employees at the expense of small firms and lower-income employees.
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