Monday, January 25, 2010

Obama missed the mark on health care tax

As I wrote back in December, the government needs to close the tax loophole of employer-provided health care.

Some employers agree to lower their workers' salaries a little, and in exchange buy them health insurance. Economists call this a non-monetary compensation. But currently this little accounting trick flies below the IRS's radar and the workers who enjoy this are not taxed for their health care benefits.

This came up in the 2008 presidential primaries, and I was glad to see that Obama reversed his opposition to this tax.

But that joy was premature, as the Democrats have caved in to union pressure and are exempting organized laborers, currently until everyone else has been taxed for five years.

As the New York Post put it:

The 40 percent excise tax on what have come to be called "Cadillac" health-care plans would exempt collective-bargaining contracts covering government employees and other union members until Jan. 1, 2018.

There really is no justification to give special treatment to government employees and cabal-organized workers. They have been on the wrong side of this issue, and their argument consisted of repeating their conclusion over and over again.

I really wanted to give Obama credit for something big. He's a really likable fellow, and our elected leader, but he screwed this one up. Instead of closing a silly loophole in our tax laws, he's given government employees and the already well-off union workers another advantage over everyone else. Shame on him.

No comments:

Post a Comment