The Alliance
to Fight the 40 sent a letter that urges members of Congress to recognize the negative impact of the so-called
“Cadillac tax” on the working families with whom they are meeting during the
August recess. Congress must then return to Washington and repeal the tax.
The letter
describes the serious consequences of the tax and includes an addendum
with links to numerous studies supporting those concerns.
A strongly bi-partisan group of nearly half the members of the House of Representatives have co-sponsored bills authored by Rep. Frank
Guinta (H.R. 879) and Rep. Joe Courtney (H.R. 2050) to repeal the
tax. The Alliance’s letter urged House members to join that effort, and
an identical letter to all Senators urged them to pursue a similar bi-partisan
effort.
The Affordable Care Act’s (ACA) “Cadillac tax” is a 40% non-deductible tax on the
cost of employer-sponsored health coverage
that exceeds certain
thresholds. The Alliance’s letter notes that “While Congress’ original
intent was to target only a small number of ‘overly rich’ plans, nonpartisan
analyses reveal that it will hit
modest health plans that are expensive simply because they are offered in high-cost
areas; or because they cover large numbers
of people whose
health costs are typically higher
than average -- women,
older and disabled
workers, and families
experiencing catastrophic health
events.”
The 40% tax applies to plans
sponsored by both private sector and public sector employers, non-profit
organizations and even self-employed individuals. Consequently, the Alliance to
Fight the 40 is a broad-based and diverse coalition of employer and employee
groups.
Remarkably, even the Office of Personnel
Management – the Federal government’s own human resources department –
recognizes the serious negative implications of the tax. In its official
comment letter to the U.S. Department of Treasury and Internal Revenue Service,
it warns that the “tax will most likely require a reduction in [federal employee
health] benefits and elimination of other benefit
programs. This will impact the lives of current enrollees
and will affect
the ability of agencies to recruit and retain a world class workforce.”
The Alliance’s letter directly takes on
the assertion that repealing the tax would be costly because of the $87 billion
(over 10 years) the tax is projected to raise. The letter points out that both
assumptions underlying that score are seriously flawed. One quarter of that
revenue is estimated to come from employers paying the tax. But the Alliance
notes “many employers will be compelled to drop coverage altogether rather than
pay a 40% non-deductible tax on top of an already expensive
plan.” Three quarters of the revenue is based on the assumption
that employers will replace health benefits with taxable wages. But as the
letter recognizes, “it is economic theory, not hard evidence, supporting the
claim that employers will make up lowered health benefits with higher wages.”
The letter concludes by noting the
urgency to repeal the tax before it is too late to avoid its harsh
consequences.
About the Alliance to Fight
the 40: Stop the 40% Tax on Health Benefits
The Alliance to
Fight the 40 is a broad based coalition comprised of
public and private sector employer organizations, unions, health care
companies, businesses and other stakeholders that support employer-sponsored
health coverage. This coverage is the backbone of our health care system and
protects over 150 million Americans across the United States. The Alliance
seeks to repeal the 40% tax on employee health benefits to ensure that employer-sponsored
coverage remains an effective and affordable option for working Americans and
their families.
For more information on the 40% Tax on Health Benefits, visit our website at fightthe40.com or follow
us on Twitter @Fightthe40.
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