Dems Back Cadillac Taxes

Ah, that luxurious Cadillac...

In a potential step forward for Obamacare, Congressional leaders and the White House stated they had reached an agreement with labor groups over the taxation of high end health care plans, something labor unions had long opposed.  The deal was one of the larger hurdles left for Democrats as they try to push health care through before the President’s State of the Union address.

Negotiations in recent days had focused on raising the threshold at which the tax on so-called “Cadillac plans” would kick in — and the deal increases the threshold from $23,000 a year for a family policy, to $24,000.  The big concession is that the tax wouldn’t kick in until Jan. 1, 2018, for collective bargaining agreements, and state and local government workers. That, honestly, is an expensive cosmetic gesture; it will increase the deficit spending of health care by approximately $60 billion dollars.

Labor unions have long opposed such taxes, arguing that their members have often given up higher income for better benefits.  Very true.  But more than labor unions, this tax will hit the middle class living in high cost areas, such as New York and California, where it is quite common to find ordinary middle class families that may fall under this tax burden.  It is fairly common for average family insurance plans to cost this much in the highest cost states across the nation.

But it gets even more unseemly.  Rumors are that union members will be EXEMPT from the tax.  Thus, your neighbor across the street who is a union member could be paying thousands of dollars less in taxes than you, simply because he is a member of a union.  Or put it another way:  if you are a small business owner, you will pay much more in taxes than a labor union family does, with the exact same insurance plan.

This is not a tax on the rich.  This is truly a tax on the middle class.  The rich tend to take much higher deductible insurance, and are willing to dole out money in case of a catastrophe.  The rich, in short, prefer to make more income with less benefits.  Middle class Americans simply do not have this margin of error.  They generally have low deductible, higher cost insurance plans.  Like stated above, many blue collar workers traded higher benefits in lieu of higher salaries…and are now going to be penalized for it.  And the CBO has said that the vast bulk of the taxes obtained from the Cadillac tax plan will come from families earning $50,000-$100,000 a year…not exactly the rich Americans Democrats want to tax.

This compounds the fact that the CBO states that premiums will increase for ALL AMERICANS over the next 10 years under this plan.  So over the next decade, more and more people are likely to fall into this subcategory that will be taxed…and I highly doubt that it will be the rich falling into these categories.

In short, the Obamacare bill now hits the middle class with a triple whammy:  it doesn’t significantly improve the quality of health care, increases premiums…and to top it off, is going to tax these people to pay for these great benefits.

Is it no wonder that health care popularity is in the toilet?

One thought on “Dems Back Cadillac Taxes

  • January 23, 2010 at 12:22 pm
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    Your posting really landed right on the head. great work, I look forward to your next posting.

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