During the campaign, Barack Obama warned voters that John McCain was going to tax your health benefits. He made a big deal out of it.
Now, Congressional Democrats are proposing a new plan, one to help foster in the age of ObamaCare.
The plan? Tax your health benefits:
They would not go as far as McCain, who wanted to end the tax exclusion entirely for employer-sponsored insurance, which excludes money spent by employees and their employers on health benefits from income and payroll taxes.
But some key Democrats are talking about limiting the benefit for workers, so that those with higher incomes or more generous health benefits might pay taxes on some portion of the income they use to pay for their health premiums.
The issue is just one in an unfolding discussion of how to overhaul the nation’s healthcare system, a goal Obama has said will be an urgent priority when he takes office Jan. 20. The political climate appears right for dramatic changes that could affect millions of families, and interest groups are moving fast to position themselves.
As Rahm Emanuel says, “Never let a crisis go to waste.”
Here is the chance the Democrats have been waiting for to tap into a large pool of potential tax revenues. With everything going on in the economy, they are talking about taking more money out of the pockets of Americans and giving it away in new benefits.
But it’s just on the rich, right? No, it isn’t:
Limiting the amount of healthcare premiums that can be excluded from taxable income to $4,000 for individuals and $11,000 for families would generate $1 trillion over the next decade, Oberlander wrote, citing a 2007 report by the Congressional Budget Office. That’s roughly the cost of the health reform plan Obama put out in the campaign, according to a recent assessment by PricewaterhouseCoopers.
But even a cap of that size would mean that many middle-class people would suddenly have to pay taxes on some of the income they now use to pay health premiums – the average cost of employer-based health benefits is about $4,700 for single coverage and nearly $12,700 for family plans.
Remember the words of P.J. O’Rouke, “If you think health care is expensive now, wait until you see what it costs when it’s free.”
