Middle Class Tax Hikes on the Way?

Posted: Jan 06, 2010 12:39 PM
Yesterday I mentioned that the Obama Administration and Democrat Congressional leaders plan to meet behind closed doors to reconcile their two differing versions of health care reform. So much for President Obama’s pledge to make the entire health care reform process open and transparent. In fact, C-SPAN has asked Congressional leaders to reconsider their thinking and allow the network to air the full proceedings.

As it turns out, providing an open and transparent negotiation process isn’t the only broken promise.  The Senate’s version includes a significant tax increase on the middle class that comes in the form of increased taxes on “Cadillac” insurance plans. Democrats attempted to label these insurance plans “Cadillac” in order to give the impression that people with these types of plans are wealthy. The problem for Democrats is that a large segment of folks with these plans are hard-working American families.

Fox News reports.
The Senate bill raises the biggest chunk of its new revenue through a 40 percent tax on so-called Cadillac health insurance plans -- plans that cost more than $23,000 per family.  And that tax, critics say, will trigger a series of changes that will result in billions of dollars in new taxes on the middle class over the next decade.

First, the tax will hit plans widely used by middle-class employees. The majority of workers with the high-value plans are union members and state government employees who are not considered wealthy, even though Obama advisers like to say the tax is aimed at benefits enjoyed by the likes of Wall Street bankers.

‘A lot of those folks that have Cadillac plans have Chevy wages. And that's what makes it, has made it, somewhat controversial and a real issue of contention,’ said Jim Kessler, vice president for policy with the non-profit think tank Third Way.

And according to the New York Times:
The tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people. Within six years, according to Congress’s Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.

All eyes will be on these health care negotiations in the coming weeks, and I hope Democrat Congressional leaders reverse course and allow these negotiations to be viewed by the public. They’ve already locked Republicans out of these critical negotiations. They shouldn’t do the same to the American public.