The Right Way to Pay for Health Care Reform

The so-called “Cadillac” tax (also known as an excise tax) on health care plans proposed by the Senate Finance Committee would actually slam 40 percent of health care plans and disproportionately hit middle-class workers, older workers, and those in hazardous jobs.

Rather than impose a new tax on the middle class, we support other revenue sources:

• Require most employers to provide coverage or pay an 8 percent penalty if they do not, as proposed under H.R. 3200 in the House of Representatives. This would raise $163 billion over ten years, according to CBO.
• Levy a modest surtax on the wealthiest Americans – 1.2 percent of U.S. taxpayers – as proposed in H.R. 3200, raising $544 billion over ten years according to JCT.
• Limit the charitable deductions for individuals earning more than $250,000 and families earning more than $500,000, as proposed by President Obama, which would raise $318 billion over ten years.

It is simply wrong to make those employers who already are paying, pay even more by hitting them with a 40 percent excise tax, while not requiring anything from employers who don’t provide health care to employees. The way to end our recession is to improve, not cut, the wages and benefits of middle income families.

To learn more about the effect of this tax on health care plans, click here to download our full report.  And write your Senators to let them know that we need health care reform that does not tax workers' health care and make all employers pay their fair share.