Free Markets, Free People

Health Care – Plans To Exempt Unions, Tax Others

No “gold plated” care for you – unless you’re in a union.

Yes, friends, it’s payback time in the health care legislation world. Bloomberg reports:

The U.S. Senate proposal to impose taxes for the first time on “gold-plated” health plans may bypass generous employee benefits negotiated by unions.

Senate Finance Committee Chairman Max Baucus, the chief congressional advocate of taxing some employer-provided benefits to help pay for an overhaul of the U.S. health system, says any change should exempt perks secured in existing collective- bargaining agreements, which can be in place for as long as five years.

The exception, which could make the proposal more politically palatable to Democrats from heavily unionized states such as Michigan, is adding controversy to an already contentious debate. It would shield the 12.4 percent of American workers who belong to unions from being taxed while exposing some other middle-income workers to the levy.

This is how they manage to get at your health care plan. Baucus wants to tax any health care benefit that is more costly than those provided federal employees. Those costs are about $4,200 for individuals and $13,000 for families. The claim is they again want to go after the “rich” who have “gold plated” plans. And the example in the Bloomberg article is the $40,543 in health benefits paid to Lloyd Blankfein, chief executive of New York-based Goldman Sachs Group Inc., the fifth largest U.S. bank.

Of course that threshold will also affect people much lower on the financial totem pole than Lloyd Blankfein. For example:

It can also affect companies such as Henderson, Nevada- based Zappos.com, where workers’ $11 per hour pay is supplemented by employer-paid health insurance plans worth about $7,500.

So immediately you have an $11 an hour employee liable for $495 at 15% of the difference. But remember, your taxes won’t go up by a dime. Not a single dime.

Why the desire to exempt unions? Well it gets a favored constituency off their back, is a measure of payback for their support and union members can then enjoy their “gold plated” coverage while $11 an hour workers pay the freight. Don’t believe unions have gold plated coverage. Try this example:

Sandra Carter, a retired Pacific Bell Telephone Co. technician from Stockton, California, said her health benefits, worth about $12,000 per year, were negotiated by the Communications Workers of America. She is unmarried with no children, meaning her individual coverage exceeds benefits paid to federal workers by about $7,800. If that amount were taxed at the 15 percent marginal rate, she would owe $1,170.

“I can’t afford the taxes I pay now,” said Carter, who said she suffers from diabetes. “Why should I get taxed on a benefit that keeps me a functioning person?”

Gee Ms Carter, why should anyone? Why is it any business of the government to limit the coverage to $4,200 and tax the rest. Who is Max Baucus, or anyone, to arbitrarily set the insurance limit at $4,200 for individuals and $13,000 for families and punish those who have better plans through taxation?

I would guess, however, Ms Carter is fine with unions being exempted and also fine with others being taxed in her stead.

Most unions, of course, see themselves as the exceptions deserving of such exemptions:

Anna Burger, secretary-treasurer of the Service Employees International Union, said in an interview that workers have often traded salary increases for better benefits in agreements.

Taxes “shouldn’t be taken from the backs of workers who have bargained away wages and other things for their benefits over the years,” Burger said.

But it is ok if others who’ve negotiated the same sort of exchange privately get nailed, eh Ms Burger? It’s not the principle, it’s the exception which is important here apparently.

To their credit, some unions are actually standing on principle:

“Either way, we are against a tax on health-care benefits in whatever form it takes,” said Jacob Hay, spokesman for the Laborers’ International Union of North America. The union represents 500,000 workers, largely in the construction industry.

Special interest democracy – political payback – so blatant now that you don’t even have to wonder if it is being done. Democrats are shameless in their pursuit of it. If you’re in a favored group, your ship has come in.

~McQ

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3 Responses to Health Care – Plans To Exempt Unions, Tax Others

  • As someone else wrote, “equal protections” lawsuit?

  • One of my old boses used to say that the US was the “land of the great too much”.

    You can understand that, when you consider that as a Canadian, we watch our friends in the south with a mixture of envy, horror and amusement.

    Of course, socialism and corruption exist to a certain degree in every western nation.  I always thought that no-one would do it better than the Americans.  Sadly, it looks as though I could be right. 

    The outrages will continue…will you be able to put a stop to it? 

  • “Equal protection” was one of my first thoughts here too. (My actual first thought was unprintably filthy.)
    But since this is a tax code thing, and the tax code has always been shot through with special interest loopholes, I wouldn’t hold out much hope for relief there.