In an earlier post on Texas Gov. Rick Perry’s economic plan, I noted that it was unclear what he would do about the employer tax exclusion for health care, which is one of the main factors driving up underlying health care costs and preventing the development of a market-based system.
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His campaign now informs me that Perry’s current plan won’t get rid of the exclusion, because Obamacare is still on the books, but the idea could be part of an overall plan to replace Obamacare once it’s repealed. The reason for the distinction is the fear that if you get rid of the tax exclusion while Obamacare is still intact, employers would drop coverage and workers would flood into the government-run insurance exchanges. This would drive up the cost of the health care law even further, place more individuals under government control and make it a lot more difficult to migrate to a free market system.
On another front, Perry’s “flat tax” plan gives people the option of remaining in the current code. But the Perry campaign says that anybody who moves to the flat tax will have to remain in that system, and can’t simply fluctuate back and forth between the codes tax year. The plan is optional, because a lot of taxpayers have planned their lives around the current code, but the idea is to eventually require Americans to file with flat tax rate.
