Opinion: Daily Journal

A Bad Bill Made Worse

RALEIGH – Multiplying a negative number by a negative number yields a positive number.* But the legislative process has little to do with multiplication. I think the correct term would be divisive.

Let me offer the example of House Bill 20. It started off its life this year as an unwise bill that would create tax credits for businesses that decided to offer health insurance to their employees. Why is this unwise? Because the taxation of non-wage benefits such as health insurance is already screwy, and the bill would arguably make it worse.

If health care is to receive favorable tax treatment – and that’s a big if – it would be better to exclude from tax a certain amount of annual spending on health care for each person, rather than providing the tax break only if health insurance is purchased by a third-party. There should be no artificial incentive for employers to pay their workers in the form of health insurance rather than in cash, retirement savings, life insurance, spacious offices, or copious parking. The compensation package should arise from the bargaining of employers and employees, not shaped by tax policy.

It is plausible to suggest that employers might be able to cut better insurance deals as a group than many individuals might obtain for themselves. But this is not always true – it depends on the specific characteristics and even location of the individuals involved – and besides employers are not necessarily the preferable group around which to base an insurance pool. Perhaps you ought to buy insurance as a member of a church, or a health club, or a political party for that matter.

Government should pass no law respecting the establishment of insurance pools or prohibiting the free exercise of insurance pooling. There should be a separation of insurance and state.

If, for the sake of argument, we assume that government should try to reduce the ranks of the uninsured or establish a health care “floor” under which no one, regardless of income or health, should fall, it would still be better to offer tax credits to individuals, not to employers, letting the former decide what health care they will buy and where. However you look at it, tax credits for business-based health insurance aren’t a good idea.

So what have liberal members of the North Carolina House done? In an attempt to “balance” the bill, since the tax credits are deemed “pro-business,” they have attached their previously defeated hike in the state minimum wage. That’s not just an unwise piece of legislation. It is a highly undesirable measure that will hurt consumers, employers, and workers.

This is certainly a case in which two wrongs don’t make a right. Why not attach a state lottery and a death-penalty moratorium to the bill, too? Let’s have a contest to see just how bad a bill we can fashion.

Hood is president of the John Locke Foundation.

*If you want to truly understand the underlying reasons why, my old college pal Kenny Felder, a math instructor, lists them in this entertaining post.