Originally posted on January 15, 2010.
Over the past few days, Obama has held extensive close-door meetings with democratic leaders to discuss how to pay for his massive health care plan. Politico reports that:
Those involved in the talks sought to keep details of their progress under wraps. The negotiations delved into the Senate’s controversial tax on expensive insurance plans, which unions and House members strongly oppose, and, for a while Wednesday, labor leaders huddled privately with top administration aides.
Reports released yesterday announce that democrats have reached a deal with union leaders to tax expensive employer-provided health insurance plans also known as the “Cadillac Tax.” Barely any details have been released thus far. However, CNN confirms that democrats:
…have reached a tentative deal with labor unions on restructuring a tax on high-end insurance plans, a key proposal to pay for health care reform, according to two sources familiar with the fast-moving talks.
According to Thomas Firey, a scholar at the Cato Institute, this damaging “Cadillac Tax” would:
[A]dd a 40% excise tax to any amount above $8,500 paid for an individual worker’s coverage, or above $23,000 for a worker’s family. Labor leaders claim that a quarter of unionized workers would be subject to the tax, and government analysts estimate that 22 percent of all workers would be subject to it in 10 years.
It is a common practice for employers to increase their employee’s health benefits as an alternative to increasing their wages. This tax has the potential to negatively affect workers from various income levels. The Washington Postreports that such workers are staunchly opposed to the proposed excise tax:
[T]he proposal has infuriated many House members as well as union leaders, who argue the tax could strike deeply into the middle class to affect small businesses and older workers as well. They also complained that the tax, which would raise nearly $150 billion over the next decade, was designed to strike an ever-growing number of health policies.
Looking back to 2008, Obama declared:
I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.
But this “Cadillac Tax” would be passed on to middle-class workers in the form of higher premiums. Such a tax would be just one more of the many campaign promises that the President has broken.