Republicans are blaming Obamacare and a decades-old tax break for stagnant wage growth in the U.S.
Lawmakers on the House Ways and Means Committee took aim Thursday at the employer exclusion, which is a tax break for employer-sponsored healthcare plans.
"Congress incorporated this highly popular tax break into the tax code decades ago so that employers could attract and keep workers during a time of wage freezes," said Ways and Means Chairman Kevin Brady, R-Texas. But Brady said the exclusion is a "contributing factor" in our country's stagnant wage growth.
"That's because the tax code incentives [put] a greater share of compensation toward nontaxable health plans and less to taxable paychecks," he explained. "So, as healthcare costs rise, employers divert increases in compensation to healthcare at the expense of take-home pay."
He added that Obamacare has limited consumer-driven plans, including health savings accounts or flexible spending accounts. Expanding the use of such accounts can help lower costs for consumers, he said, a popular reform that most Republicans support.
The money in a health savings account isn't affected by federal income tax, and the accounts are mostly used under high-deductible healthcare plans.
Democrats chided Republicans for calling for moving toward these accounts instead of Obamacare's tax credits.
"HSAs are not an adequate replacement for comprehensive healthcare coverage," said Rep. Sander Levin, D-Mich., the panel's ranking member. "They can lead low and middle income Americans to put off healthcare because they simply cannot afford to pay high deductibles or co-pays."
Levin also took aim at any change to the employer exclusion, slamming Brady and other Republicans for not being consistent on what should replace the exclusion.
"You say you don't want to eliminate the exclusion but then you want to come up with a tax credit and give people control of of their healthcare," he said. "Essentially, if you think it through, what you want to do is replace employer-based healthcare."