Swing-State Senators Concerned About Tax on Employer-Paid Coverage
By Shailagh Murray
Senate Democratic leaders are warning Finance Chairman Max Baucus (D-Mont.) that growing opposition to a tax on employer-provided health care benefits could prevent Senate passage of health-care reform, and are urging the chamber's lead negotiator to seek other revenue options.
A Democratic source familiar with the discussions said concerns are the especially pronounced among new senators from swing states. Tax-free health benefits represent the biggest loophole on the Internal Revenue Service's books, worth an estimated $1 trillion over 10 years. Even t axing the most expensive benefits at $17,000 per family after 2013 could yield about $418 billion over 10 years, a June estimate by the Joint Committee on Taxation showed.
But recipients of the exclusion include middle-class people and many union members who receive generous employer-provided coverage. The idea polls terribly, according to a spate of recent surveys, and senators are wary about the prospect of educating the public about a changes to benefit that many are unaware they even receive.
Sen. Kent Conrad (D-N.D.), who is helping Baucus to assemble the finance bill, said lawmakers will examine variations on the exclusion, along with other revenue sources. "There are different ways to do it," said Conrad. "We are searching for options, and there are a fair number of them that can work."
Sen. Ron Wyden (D-Ore.) has proposed one alternative: he would replace the exclusion with a tax deduction that captures some revenue from health benefits, but also allows people to keep their coverage when they change jobs.
Another alternative is the proposal President Obama favors, capping tax deductions for high-income individuals. Conrad said that's still on the table. Or Congress could tax sugary beverages, yielding about $50 billion over 10 years while also targeting the public-health costs of diabetes and obesity. But many lawmakers oppose the sugar tax because it would disproportionately affect low-income people.
Web Politics Editor
July 7, 2009; 6:28 PM ET
Categories: Dem. Leaders
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