Personal Health Investment Today (PHIT) Act: A good idea?

The first time someone yells, “Get off the road, you paid in pre-tax dollars for that bike!” I’m going to punch whoever came up with this bill.

In all seriousness, I am in favor of going in this direction. When we make things that are good for our health relatively cheaper, people consume more of them, and everyone wins. That said, I’m not sure this is the best way to go about doing it. It’s a tax break on luxury items and activities. These items and activities may be beneficial to society as a whole, but it seems that those most in need would see very little benefit. I don’t know the numbers, but if you’re a family near the poverty level, does $2000 in pre-tax spending make any difference at all?

@jrenaut 77517 wrote:

I don’t know the numbers, but if you’re a family near the poverty level, does $2000 in pre-tax spending make any difference at all?

If you’re a family near the poverty level, I don’t think it’s all that likely your job offers a “pre-tax medical account” in the first place, is it?

@mstone 77528 wrote:

The tax code has enough complicated special interest gimmies for the upper middle class already.

I don’t think this adds much complexity — it seems to just expand the list of items that can be purchased with a flexible spending account. That list already includes stuff like eyeglasses, etc., not just non-covered medical care.

Maybe progressives could link it to minimum wage or EITC expansions. Here’s your campaign slogan:

“Give the working poor a break and get the middle class off it’s ass!”

@PotomacCyclist 77536 wrote:

One counterpoint to the argument that this only benefits the upper-middle class is that significantly reduced healthcare spending by the gov’t. would free up funds for other programs. It could be difficult to confirm that any reduced healthcare spending is related to the PHIT Act (if it passes), because there are other ongoing efforts to reduce such spending. But really, other efforts to control costs that do not address the lifestyle and nutrition problems are minor, compared to what could happen if more people became active and ate better.

The history of essentially all of the pre-tax programs is that they are handouts to people in upper tax brackets. (E.g., look at where most of the money in 401k programs goes–people at the bottom of the income spectrum simply don’t have $16k/year of extra money, and no [significantly less valuable to someone in a low bracket than a high bracket] tax benefit is going to change that.) Something like this is extremely unlikely to actually motivate large numbers of people to go to a gym. It is extremely likely that people who already spend a lot of money at gyms will have their accountants write off their gym expenses to rationalize more money for starbucks.

Changing the formulas for commodities subsidies would do far more to change the health picture in this country. It would also impact enough special interests that it’s basically dead on arrival. The only reason that a gym subsidy could possibly pass congress is exactly because it is a middle class handout (not because it could have any affect on health care costs commensurate with the cost of the benefit).