Your employer provided heath insurance is compensation for you working there. Why isn't it taxed like regular income? Just because you don't get it in the form of a paycheck it doesn't mean its not compensation.
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Because tax law is not always about generating revenue for the government. In many cases (such as this one) it is intended to encourage something that is seen as beneficial to society. Since our society - in general - regards a person's having health insurance as a 'good thing' we provid a tax benefit to encourage people to have it. In effect - by keeping health insurance tax free, more people will have it.
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