Organisation for Economic Co-operation and Development (OECD) researchers suggest that the United States might be wise to change insurance tax rules.
The researchers at the OECD, Paris, have included the recommendations in an economic survey.
The researchers say the United States could start to reduce its budget deficit and improve its overall finances by reducing a variety of “tax expenditures,” such as the mortgage interest deduction on owner-occupied housing and “the exclusion from personal income and payroll tax of employer-provided health insurance coverage.”
“There is also scope for reducing other tax expenditures, such as the exclusion of capital gains from estate taxation, that neither enhance economic performance nor social equity,” the researchers say.
Elsewhere, in a section on tax reform, the researchers suggest that the United States could gain $226 billion from 2010 to 2019 by including in taxable income employer-paid premiums for income replacement insurance and $25 billion by eliminating the tax exclusion for employer-provided life insurance.
Both changes would increase fairness, the researchers say.
Including investment income from life insurance and annuities in taxable income could raise another $265 billion, the researchers say.
The OECD researchers praise current U.S. efforts to implement a new “Cadillac plan excise tax” on high-value health benefits plans.