WASHINGTON (Reuters) - A senior Senate Democrat said Tuesday he would consider taxing U.S. workers on their employer-sponsored health insurance to help pay for extending coverage to millions of uninsured Americans.
"I think that tax provision should be on the table," said Senate Finance Committee Chairman Max Baucus, who will play a major role in writing the legislation to revamp the U.S. healthcare system as promised by President Barack Obama.
"It's too aggressive. It skews the system," he said of the tax benefit.
Most U.S. workers with health insurance get it through their employers -- 160 million of them -- although recent surveys have shown that number is declining as businesses try to cope with the rapidly rising cost of insurance.
The employer-provided benefit is not taxed as income and critics say the tax break encourages workers to seek a more generous benefit package than they might want if it was taxed.
Eliminating the tax break was part of the health overhaul package proposed by Republican Senator John McCain in his unsuccessful presidential bid against Obama.
But taxing health insurance benefits as income will likely meet with strong resistance from labor unions who negotiate benefit packages on behalf of their members.
This may be one of the few times in my life that I'm pro-union. If they can stop this, God bless 'em.
How many of you really know what your health care plan costs your employer? I believe the one my wife has runs somewhere in the neighborhood of $9,000 per year, and that's for an HMO. If that benefit is taxed at the 25% tax bracket that could cost us an additional $2,250 per year in taxes.
Think about that for awhile.
Add that to the $1,200 a year cap-and-trade will cost you, plus for the higher brackets the reduced deductions will add a bunch of new costs. And then there's the higher gasoline prices that are sure to come because Obama wants to reduce our domestic oil production.
It just gets better and better.
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