Months after warning voters that Democrats would raise taxes, President Bush will propose his own tax hike in tonight’s State of the Union address, a move on which Democrats already are pouncing.
“Under the president’s proposal,” the White House said Monday, “health insurance would be considered taxable income. This is a change for those who now have health insurance through their jobs.”
That means Americans would have to pay taxes on company-sponsored health care benefits that cost more than $7,500 a year. Married couples would pay taxes on benefits that cost more than $15,000.
“Yes, some people would be paying more,” White House Press Secretary Tony Snow acknowledged to reporters.
In a political role reversal, Senate Democrats criticized Bush, who has long been known for cutting taxes, for proposing just the opposite.
“President Bush’s health insurance proposal amounts to a tax hike for the middle class,” said a statement put out by the office of Senate Majority Leader Harry Reid, D-Nev. “In the same year the president will submit a budget making his tax cuts permanent — tax cuts that went overwhelmingly to the richest Americans — he is proposing to shift more of the cost of health care onto working Americans.”
The White House sought to justify such a tax increase by saying it would pay for tax breaks for Americans who purchase their own insurance, thereby making health care more affordable to more low-income Americans.
“There’s the prospect that under the president’s plan, more than 100 million people are going to pay less for health insurance, and millions more who are not presently insured will have access to it,” Snow said.
Throughout last year’s midterm election campaign, Bush repeatedly warned voters not to elect Democrats because they would “raise your taxes.” But now that Democrats have won control of Congress, Bush is proposing a tax increase that he thought would earn him some goodwill fromDemocrats.
“You have a Democratic Congress that came in two weeks ago saying we want to get things done,” Snow said. “We’ve got some offers that they’re going to be pretty good for them.”
To limit dissent among Republicans, the White House has pre-emptively reached out to influential conservatives to assure them that the tax increase would merely pay for other tax breaks.
“I got a call from Karl Rove on Saturday night — I was assured that it is revenue-neutral,” said Grover Norquist, president of Americans for Tax Reform. “If it turns into a net tax increase, I’d veto it.”
Norquist said the Bush plan, if enacted, would reduce the overall cost of health insurance in the U.S. by encouraging workers to scale down the cost of their company-sponsored plans.
“People will rewrite those gold-plated, union contract insurance plans to be less expensive,” he said.
