Filed Under: Anything Peaceful
Tags: health insurance • healthcare reform • taxation
The Senate's 40 Percent Middle-Class Tax
The New York Times‘ Bob Herbert has a thought-provoking column for a change. He shows that the Senate health-insurance bill’s 40 percent tax on “Cadillac” coverage, which has been sold as a tax on the rich, will easily become a tax on the middle class — if it works as the authors expect.
Within three years of its implementation, according to the Congressional Budget Office, the tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people. Within six years, according to Congress’s Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.
Most of the revenue — 82 percent — will be paid as income tax by employees when their employers downscale their coverage plans to avoid the tax. The savings from cheaper coverage would free up money for higher — taxable — cash wages. (Health plans of course are not taxed.) Herbert and others are skeptical that employees will see any of that savings, but that will depend on the demand for labor in any particular industry.Aren’t our misrepresentatives thoughtful?
