Tax policy as social policy: cafeteria plans, 1978-1985.
Since the passage of Section 125 of the Internal Revenue Code in 1978, cafeteria plans have offered employees a choice of tax-free fringe benefits. Although these plans have been popular with employers and employees, Treasury Department officials and many tax lawyers soon came to regard Section 125 as a mistake. The Treasury has tried to reclaim through regulation the revenue and the fundamental principles of tax law it had asked Congress to give away in 1978. This paper is a history of Section 125 that emphasizes its relationship to health policy. On the basis of interviews and printed primary sources, the paper argues that Treasury officials made a less than rigorous assessment of the impact of cafeteria plans because they were preoccupied with a larger agenda of making tax-free benefits more equitable. Moreover, they saw no reason to collaborate with the health policy community to plan this agenda; they saw themselves as implementing a social policy already in the Internal Revenue Code.
Fox
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DM
State University of New York (Stony Brook).
Schaffer
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DC
D002961:Civil Rights; D003363:Cost Control; D004651:Employment; D006077:Government Agencies; D006291:Health Policy / Q000331:legislation & jurisprudence*; D006801:Humans; D011640:Public Policy; D012456:Salaries and Fringe Benefits / Q000331:legislation & jurisprudence*; D013660:Taxes / Q000331:legislation & jurisprudence*; D014481:United States