I mentioned in an earlier post that I was a fan of McCain’s health care plan, especially over the plans of the two Democratic candidates. Here’s something I think should go hand-in-hand with it — pay stubs must be made more transparent. Bear with me. I promise it’s relevant.

We all know that certain bills (like Social Security tax, for instance) are “split” between us and our employer. Some percentage of those costs come out of our paycheck, and the rest is “paid by the employer”, which is a useful little lie that allows the government (or whoever is collecting the bill) to hide exactly how much money is being spent.

Much like corporations don’t really pay taxes (either their customers do, via higher prices, or their employees do, via lower wages/benefits), none of these bills are really being paid by our employers — they’re effectively being paid by us.

Think of it this way. Let’s imagine you gross $60,000 a year. On your paystub, you see that you pay $3,500 in Social Security tax a year. You know that the company matches that amount, and paid another $3,500, but it doesn’t appear on your paystub, so the company paid that money, not you, right? Technically, the company sent their $3,500 to the government, it also sent “your” $3,500 — so you could look at it as though they paid $7,000, and you paid nothing^[a], but you could also look at it the other way around.

When a company hires an employee, they budget a certain amount of money that pays for that employee. This includes their benefits and their salary, including any of the “shared” costs like the “employer’s” half of the Social Security tax. It’s not a huge stretch to consider all of that money to be the employee’s money, and I think it’s only fair that we get an accounting of that money. I want to see everything that’s budgeted for me, not just the amount that the company decides to let me see.

If employees saw that, they’d be more capable of making decisions about whether they thought certain benefits were really worth it. Maybe I’d decide that the “free” lunch benefit^[b] is nice, but that I’d rather pocket the $75 every two weeks and bring my own lunch from home. Or, maybe U.S. citizens would see exactly how much of their money is going straight to the coffers of Big Brother and realize that smaller government was much more palatable.

Okay, now that I’ve had my little digression, what does any of this have to do with McCain’s health care plan?

As I mentioned, McCain’s proposed tax credits would cover the difference in costs if I chose to purchase my own insurance (and if I chose to invest the difference, I’d be quite a bit ahead). But the amount shown on my pay stub is not the amount my company really pays for me to have health insurance. If I choose to opt out of the company’s health insurance now, I get my $100 per month (minus taxes) back in my pocket, but I’ll never see any of the other money the company has set aside for my health care expenses.

But what if I could see the other money on my stub every week? What if I could see that another $100 a month^[c] was set aside to pay into my health insurance every month? I might complain, but the likelihood that my complain alone would mean anything is nil in this case. But what if McCain’s plan (or a similar one) took lots of people out of the employer-chosen plan? Would our complaints be more likely to be heard if there were five of us? Ten? A Hundred?

Employers should be required to inform employees of all the money that is budgeted for us so we have the right to decide how much our various benefits are costing us. I’m not saying employers should have to offer all benefits a la carte, but informing all employees of how money is spent would give us more information on which we could base decisions when looking for employment or when discussing benefits and salaries with our current employer.

1. In fact, politicians are (quite literally) banking on you seeing it this way — you don’t feel the hurt of the money that doesn’t come directly out of your pocket, so you accept much higher taxes than you would otherwise. That’s why so many politicians are so very, very opposed to the FairTax proposal [↩]
2. No, my company doesn’t really offer this [↩]
3. I’m estimating this number, but I think it’s a fair guess [↩]