Originally Posted by Piobaire
First, let's be clear here. The current system is not a "tax deduction" but rather preferential tax treatment of premiums paid through employer sponsored plans. Second, could you explain why removing this "deduction" is good but then doubling back and adding a credit or subsidies on one's tax return is a) different and b) good/better?
So far as I understand the argument for a credit is that it gives a subsidy back to people who are buying insurance, but doesn't disproportionately benefit higher income earners (like a deduction does, since it comes off the top of your income). Some discussion of this and other concerns in the article I posted (perverse incentives etc).
If we did a dual-tier plan you wouldn't even need the credit I suppose, since the government would handle all the low income people, but that's a whole different discussion.
There's about a zillion articles out there talking about the tax dynamics of all this, I'm not any kind of primary authority so I'm not going to pretend and defend this at any kind of high level.
Also, yes, libertarians like more transparent markets. They however do not like highly artificial ones created by government entities, like say, exchanges.
What's fundamentally wrong with an exchange? It's a big listing of prices. Seems to work pretty well for stocks, futures, etc, etc. Better than having to go through a bunch of individual companies and ask them for quotes, which is what we'd have to do without something like this (as individuals).
Maybe this one isn't structured ideally, but fundamentally what's the issue?