The editorial "Why Tax Only Wages?" (April 10) overlooks some important points and also inaccurately describes the opposition's views of the Treasury's proposals on taxing employee benefits.
For one thing, not only the insurance industry is fighting them. A recent open letter to President Reagan opposing the proposals, which was printed in The Post, was signed by 38 organizations, ranging from the AFL-CIO to the U.S. Chamber of Commerce.
Also, the editorial gives the impression that relatively few people would be affected by Treasury's proposals, particularly the cap on employer-paid health insurance. This is just not the case. It would have broad effects, particularly on lower-and middle-income workers and older Americans.
About one-half of civilian employees who receive some employer-provided group health insurance would face tax increases, according to the Treasury Department. Our surveys show the situation would be most serious in the larger cities, such as New York and Los Angeles, where costs are the highest. The tax also would discriminate against groups with higher proportions of older workers, since their premiums are normally higher. This means smokestack America, already suffering, would be hit even harder.
A tax on health insurance benefits also could force younger, healthier workers to drop or curtail their coverages. The need for this important financial protection, however, will not diminish and ultimately could lead to demands for increased public insurance programs, at still greater expense to American taxpayers.
On the matter of life insurance, the editorial says the best paid workers get the best paid benefits, but it ignores the fact that employer-provided group life insurance in amounts over $50,000 is already taxed. The workers most hurt by this Treasury proposal would be low and middle income, because protection up to $50,000 would be taxed for the first time.
The editorial says that even if workers had to pay some taxes on their employee benefits, their total tax burden would almost surely go down. However, a recent survey by the Roper Organization showed that people at all income levels say that taxing of employee benefits is the least popular of seven possible ways of reducing the budget deficit. In fact, more people think we should raise personal income taxes than think we should tax employee benefits.
Employee benefits are deeply rooted in the fabric of our society, and are a prime example of how the government, through its tax policy, has encouraged employees to work toward their own financial security. It would be a serious mistake to change that policy at this time.