One of our readers, Kevin, wrote to say he was confused by my description yesterday of the premium subsidy in Senate Finance Committee Chairman Max Baucus’ health reform plan as a tax credit. “It sounds like a voucher to me,” he wrote. Sounds like a voucher to me too. Except it isn’t. The proposal would work like this: Everyone would be required to buy insurance, and low- and moderate-income people would get a government subsidy to help out with the premiums. The subsidy, however, is designed as a refundable tax credit paid directly to insurers. The size of the credit is based on an immensely complicated sliding scale.

Lots for tax wonks to chew over in Senate Finance Committee Chairman Max Baucus’ health bill. The measure, which has yet to garner any Republican support, is already being called an opening gambit and is likely to be revised as it heads to committee markup next week. Still, it is an indication of how intertwined tax and health policy have become in recent years. Here are some of the key provisions:

Last weekend, while tea party protestors flocked to Washington to complain about taxes and big government, I was meeting in Toronto with other tax policy wonks for two days of technical discussions on tax expenditures: tax-code provisions that target special benefits to selected taxpayers or activities. And we found that, increasingly, the big government the tea party people fear is doing its business through this pseudo-spending.

As rhetoric, President Obama’s speech last night was an A+. As policy, it was the clearest description we’ve yet heard of what he really wants. As a step towards getting a bill passed...we’ll see. Here are some thoughts about what the President said. After a summer of confusion, Obama told us what he wants health reform to look like: Everyone would be able to buy insurance at a reasonable price, regardless of health status; everyone would have to purchase coverage; government subsidies would be available to help many (though not all) of the uninsured buy coverage; and any bill would be fully funded. This is insurance restructuring, not system reform. Still, if Washington can pull it off, it would be a very impressive achievement.

A review of books on Bernie Madoff in a recent Sunday Washington Post caught my eye because it reminded me of a high school friend. The review describes an assignment given to Madoff and his high school classmates in the 1950s to read a book of his choosing and make an oral report in class. Bernie didn’t get a book read, and when his turn came in class invented and described a non-existent book. When asked to produce the book, he explained he didn’t have it because he had already returned it to the library! And, although some of his classmates were suspicious, no one turned him in. Thus began the career of the great fraudster.

Before you give up entirely on the idea of health reform, take a look at the Healthy Americans Act, a broad-based reform bill with some interesting tax provisions sponsored by senators Ron Wyden (D-Ore.) and Robert Bennett (R-Utah).

Howard Gleckman made a strong case yesterday for repealing the provision that allows unlimited conversions of traditional (deductible) IRAs into Roth accounts beginning next year. Today, Len Burman adds the totally sensible suggestion that Congressional scorekeepers display the present value costs of such provisions, so we’ll know that they cost the government money in the long run despite the short-run revenue pickup in the budget window.

Yesterday, Howard explained why the Roth rollover loophole, set to open in 2010, is horrible policy. By pre-paying tax on accumulated IRAs, rich folks can effectively increase their tax-free savings by close to half. (My 2006 article explains this point.) And the rollover option is worth most to people who don’t actually need retirement accounts to finance their old age.

High-income investors are about to enjoy a massive tax windfall from Uncle Sam. In just a few months, they’ll be able to convert their Individual Retirement Accounts--where investment earnings are taxable at withdrawal-- to Roth IRAs-- where they are tax-free. As financial planners are happily telling their big-ticket clients, this will be the gift that keeps on giving.

Alan Auerbach and Bill Gale wrote an interesting new paper that tries to answer an important and timely question: Does fiscal stimulus actually work? Their conclusion: It doesn’t do a bad job at all. In a paper prepared for the Fed’s August 20-22 Jackson Hole conference, Alan and Bill conclude that while the evidence is still a bit dicey, there is a strong case to be made for well-timed tax cuts and spending increases.