Labor & Employment Law

A Tax on Health Care Benefits: The Wrong Policy

By Seth Michaels

Members of Congress, union members and working family activists rallied in Washington, D.C., today in support of health care reform?and against funding it with a new tax on health benefits.

Sen. Bernie Sanders (I-Vt.)?who has introduced an amendment to remove a benefits tax from the Senate bill?and Rep. Joe Courtney (D-Conn.) were joined by workers from across the country who would be hurt if a new benefits tax became law, as well as leaders from across the union movement.

AFL-CIO Executive Vice President Arlene Holt Baker attended the rally and said placing a tax on working people’s health benefits would be a step in the wrong direction for health care:

Some in the Senate are now proposing that workers who already have it so hard should have to pay more for the health care they have. We’re here to say that’s just plain wrong. This is not just a union issue. Taxing benefits would hurt all workers?we know that one in five workers would be hurt by this tax and that’s a lot more people than union members.

Valeria Castle-Stanley, a call center employee and Communications Workers of America (CWA) member from Virginia, was among the workers who spoke at the rally. You can watch a video of Castle-Stanley speaking out against a tax on health care benefits.

CWA released the results of a new poll today and found 70 percent of likely voters think a tax on health care benefits is the wrong way to pay for health care reform. Some 54 percent say they’d prefer to see health care reform paid for as it is in the bill passed by the U.S. House?with a surtax on the very wealthiest households. Research by the National Education Association (NEA) shows a health care benefits tax could reduce benefits and wouldn’t result in gains for workers.

The Senate’s health care bill would set a tax on health plans worth more than $8,500 per year for individuals and $23,000 per year for families. For workers in high-risk occupations, for retirees 55 or older and for residents in the 17 highest-cost states, the bill would tax plans worth more than $9,850 for individuals and $26,000 for families.

The House bill offers a better solution for funding health care reform: with a modest tax on the very wealthiest, who benefited disproportionately from the Bush tax cuts and the unequal economy of recent years. Hitting middle-class families who are struggling in this economy is not the right answer.

The AFL-CIO is airing a TV ad in key states against a tax on middle-class health benefits and is running a print ad as well. You can download a fact sheet about why this tax is the wrong policy here.

Full post as published by AFL-CIO NOW BLOG on December 10, 2009 (boomark / email).