A major union leader, commenting on Congressional Budget Office claims that employers will pass along, in the form of raises, cost savings that result from a tax on workers' health benefits said today that, "They may also believe in the tooth fairy."
Gerald McEntee, president of the American Federation of State, County and Municipal Employees also said, "Unfortunately, even some progressive leaders, like my friend Sen. John Kerry, have been taken in by myths that favor the tax."
Sen. Kerry said, in an article in the Huffington Post earlier this week, that an excise tax on high cost health plans will help control health care costs without taxing workers.
"The facts simply don't support his conclusion," McEntee said today.
McEntee pointed to findings by the Joint Committee on Taxation that the vast majority of revenue collected from the tax will come from individual income taxes and joint filers and not by insurance companies. "Employers will respond to the tax by reducing benefits they offer employees," McEntee said, "so they can fit their premium charges under the tax threshold. To the extent insurance companies pay the tax, the tax will be directly passed through to employers in the form of higher premium charges."
If, when the new bill becomes law, a tax on workers' health benefits is included, it will be the first time in U.S. history that such benefits are taxed.
"For years, workers have given up wage increases in order to protect their health benefits," McEntee said. "Now, those workers and their families will lose the health benefits on which they rely."
Many of those who support the excise tax, including the Office of Management and Budget Director Peter Orzag, support the idea that the tax will force companies to trim benefits and require workers to pick up more of the tab for them.
"That's a double whammy for workers," McEntee declared, adding, "It is certainly not the ‘change' our members expected when they knocked on doors and cast their ballots for President Obama and Vice president Biden.
The union leader said "the excise tax is not essential, or even relevant to health care reform. It is a tax policy, not a health care policy."
The CBO's scoring of the Senate bill actually supports McEntee's point.
CBO calculates that the Senate bill will decrease the federal budget deficit by $130 billion over the 2010-2019 period while the excise tax will raise $149 billion. The figures, tax opponents say, show that the excise tax is not a necessary component of health care reform, even as a funding mechanism. At most, they say, the tax is simply a method to raise revenue for deficit reduction.
The labor movement has been saying there are better ways to fund health care reform and to reduce the deficit.
"The House bill would do it by asking the wealthy to do their part through a small surcharge on families earning more than $1 million annually. It asks the richest Americans, and the insurance companies responsible for the skyrocketing costs, to pay their fair share."
Gerald McEntee addresses rally in Washington DC.