Wyden’s plan may not go anywhere, but McCain’s tax exclusion might. Here’s where the political story comes in. As McArdle told me, “there’s quiet interest in Congress for capping the exclusion. If you talk to individual members, you will hear them say privately there should be a limit on the exclusion.” Although making the total value of the benefit taxable is probably not in the cards, politicians on both sides of the aisle are considering making some portion taxable. Currently, the exclusion costs the federal treasury some $160 billion in foregone revenue. For a Congress on the pay-as-you-go plan—that is, for every new program, an old one must be cut—the tax exclusion is a juicy revenue source that could be used to shore up Medicare or finance the tax subsidies for the poor that candidates have been promising. There are a lot of equity issues here to examine.

So journalists, go for it and tell your audiences about the far-reaching consequences of all this. With taxes high on the agenda for the new Congress, the public deserves to know whether a tax increase will be in their future.

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