Health Insurance Tax Hits Union Workers, Public Employees

By Daily Editorials

July 7, 2009 2 min read

Another presidential "no new taxes" pledge may be ready to bite the dust.

President Barack Obama promised during his campaign to contain his tax hiking zeal to those Americans who, in his view, make too much money. For everyone else, candidate Obama vowed, "no one making less than $250,000 a year will see any type of tax increase. Not income tax, not capital gains taxes, not any kind of tax."

Except for maybe a tax on health insurance benefits. Bowing to congressional pressure to come up with funding for his massively expensive health care proposal, the president says he won't rule out taxing employee benefits. The White House says health insurance coverage valued at more than $17,240 for families and $6,800 for individuals might be taxed as income.

That's fairly rich coverage, enjoyed primarily by union workers and public employees. Most other people, including those making above Obama's $250,000 threshold for being rich, are paying enough of their own coverage costs to keep the value under the limit.

Those employees impacted by the tax — schoolteachers, autoworkers, etc. — were heavily in Obama's column in last fall's election and didn't seem bothered by his attacks on wealth. Perhaps they didn't realize their generous benefits would qualify them as wealthy.

They're looking at $2,000 to $4,000 a year in extra income taxes as their reward.

There might be a benefit in this for employers. Workers who have resisted negotiating reduced health care packages may see some advantage in agreeing to plans that keep them under the taxable limit.

Still, the health benefits tax ought to be a reminder to voters: A politician who says he will raise taxes on some will eventually raise taxes on all.

REPRINTED FROM THE DETROIT NEWS.

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