The centerpiece of McCain’s plan is to alter the tax breaks the federal government grants those who purchase health insurance. Currently, every dollar your employer spends on health benefits avoids federal payroll and income taxes. If you don’t have job‐based coverage, you generally get nothing.
McCain proposes to eliminate that inequitable tax break and replace it with a universal tax credit. Every individual would get a flat $2,500 tax break, while families would get $5,000, no matter where you purchase health insurance.
Since part of the idea is to eliminate the existing tax break, Biden for weeks has called the McCain plan a tax increase: “For the first time in American history, they want to tax your health care benefits.”
The Washington Post awarded Biden four “Pinocchios” for omitting the fact that McCain would replace that tax break with another, which would be much larger for most workers. The left‐leaning Tax Policy Center estimates the average taxpayer would see their tax bill go down by $1,241 in 2009, though the average tax cut would get smaller over time.