Americans love a winner, and Congress can deliver a big win for working Americans by repealing the so-called “Cadillac Tax” on employer-provided health insurance coverage.
Contrary to its name, the “Cadillac Tax” is not a tax on “luxurious,” high-end health insurance, or corporate executives, or the rich as some claim. It is an onerous and counterproductive 40% excise tax on the efficient coverage enjoyed by more than 181 million working Americans and family members — affordable coverage that people like and want to keep.
Support for full and immediate repeal is more than bipartisan — it is practically unanimous: On July 17, the House of Representatives overwhelmingly approved the Middle Class Health Tax Repeal Act (H.R. 748) by a vote of 419 to 6. Final enactment of this measure would be worthy of a parade down Pennsylvania Avenue.
Repeal of the “Cadillac Tax” would be a huge win for hardworking American families in the form of meaningful tax relief. Even though the tax has been delayed, the looming imposition of this tax is already forcing workers to pay more for healthcare coverage. Since 2010, deductibles on health plan coverage have increased 109%, in part because the looming imposition of the tax is compelling employers to share more costs and trim benefits.
Repeal of the “Cadillac Tax” would be a win for people who need health coverage the most: women, older and disabled workers, and families coping with chronic illnesses or devastating health crises. This misguided tax also indiscriminately hits people harder in communities and states with especially high healt care costs, such as Alaska and New York.
Repeal of the “Cadillac Tax” would be a win for employer sponsors of healthcare coverage. At a whopping 40%, the “Cadillac Tax” is nearly double the corporate tax rate and one of the highest taxes on the books.
Businesses and labor both agree: This excessive levy on job-based health benefits is a direct threat to employer-provided healthcare coverage.
A case in point is a mid-sized Colorado employer where the “Cadillac Tax” presented the company with a painful choice: pay nearly $5,000 in taxes for each of its 285 employees — in addition to the cost of the health coverage — or make further cuts to its health plan. A company making a good faith effort to keep its employees healthy should not face a choice like this, between employees’ health and the financial health of the company itself.
Repeal of the “Cadillac Tax” would be a win for prospective congressional candidates in 2020. In a prominent new poll, 86% of voters believe employer-provided healthcare coverage should remain tax-free and, by a four to one ratio, voters are more likely to support a member of Congress that has voted to repeal the “Cadillac Tax.”
Scrapping the “Cadillac Tax” is more than a winning political issue: it’s the right thing to do for American families who feel increasing pressure on healthcare costs, the growing income gap, and lower savings rates. The 2020 election season need not be a time for inaction and political polarization; it should be a time when Congress acts decisively to help over 181 million Americans rest easier by eliminating the threat of a 40% tax on their health benefits.
The Senate should act quickly this year to approve and send legislation to the president repealing this tax, because everyone could use a win.
James A. Klein is president of the American Benefits Council. D. Taylor is the International President of UNITE HERE, a labor union that represents 300,000 working people in the hotel, gaming, food service, manufacturing, textile, distribution, laundry, transportation and airport industries.
