The question of taxing these benefits is linked with how you pay for health insurance reform. If you pay for it with a VAT and issue vouchers, the benefit goes away. If you pay for it by expanding employer provided health insurance, however, then the tax benefit should remain and the tax used should be an expanded business income tax. For sole proprietors and partners, this may involve a separate filing for each business. It might also mean merging payroll taxes into the business income tax,as well as the lower rate portions of the personal income tax (say the first 25% of any tax rate). This would exempt most individuals from filing and may or may not involve introducing a VAT as well so that people perceive that they are paying taxes, even if only nominally.