How does employer provided health insurance (whose premiums are not taxed) create a distortion?
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It discourages people from becoming entrepreneurs and working for small businesses. And since these are the engines that drive economic growth and technological development, ... It gives greater clout to the big business as an employer, when big business already has more than enough clout. It makes marriage somewhat more attractive. It makes for a less healthy population; correspondingly higher medical costs for individual, for companies, and for the society as a whole; etc. The distortions due to the tax situation were always negligible in comparison, and with the legislation that lets medical expenses by individuals be deducted from income, has become even less important.
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