"It's a financial scheme that doesn't actually cost the employees anything except, some say, their trust."
"Nobody's really being hurt, but it's so clearly creepy. So how do you get at what really is wrong with this?"
Rep. Gene Green tries to give her a progressive answer, but what he comes up with is weak and doesn't make a whole lot of sense:
"We hope our laws are based on not only fairness but morals, and to me, it's immoral to benefit from your death if I don't know you."
Um, people benefit all the time in all sorts of ways from the deaths of people they don't know.
The problem isn't that. The problem is that it's A CORPORATE TAX DODGE!
Erin Weir at the Canadian economics blog Progressive Economics Forum explains it well:
For example, on corporate-owned life insurance, Moore notes that one cannot take out fire insurance on a neighbour’s house because doing so would provide a financial incentive to burn the house down. The apparent implication is that companies may be killing off their workers to collect insurance payouts. There is no evidence of such skullduggery, or at least Moore does not present any.
The real issue, which Capitalism fails to mention, is that corporations can use such insurance policies to avoid paying taxes. Whereas interest on money borrowed to pay premiums is tax-deductible, the resulting insurance payouts are tax-exempt. "Dead peasant" insurance is not a new and sinister corporate scheme to profit from death, but an old and sinister corporate scheme to drain the public treasury.
They avoid paying taxes on money used to pay the premiums, and the benefits are tax-free.
So, yes, it does cost the employees, and yes, everyone is being hurt by it. How? There are millions of such policies involving billions of dollars that are protected from taxation for no earthly reason than insurance industry clout with lawmakers.
Taxes are what fund the social safety net. If you don't collect them you never have enough for those little extras like universal health coverage for all your citizens.
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