The UVW Union and HON Corporation are negotiating contract terms.
Assume that the union members are in the 24% marginal tax bracket and that all benefits are provided on a nondiscriminatory basis. Write a letter to the UVW Union members explaining the tax consequences of the options discussed below'. The union’s address is 905 Spruce Street, Washington, DC 20227.
a. The company w'ould eliminate the $250 deductible on medical insurance benefits. Most employees incur more than $250 each year in medical expenses.
b. Employees w'ould get an additional paid holiday with the same annual income (die same pay but less work).
c. An employee w ho did not need health insurance (because the employee's spouse w’orks and receives family coverage) would be allowed to receive the cash value of the coverage.