Taxing Health Care as Income

So you thought the new administration was really for middle-class tax cuts? There is no way a government can run the financial services industry, the automobile industry and the health care industry, without raising taxes on EVERYONE. Here is an example of what's in the works:

Unions target Wyden in anti-tax push
By Reid Wilson
Posted: 05/19/09 07:01 AM [ET]

Union groups are targeting one of their close allies in Congress over a controversial proposal to tax employee healthcare benefits.

In a coordinated campaign using radio advertising, mail and other pressure mechanisms, three top unions are urging Oregonians to voice their displeasure to Sen. Ron Wyden (D-Ore.), whose proposal may be stalled in the Senate.
The radio ads, purchased by the National Education Association, the American Federation of State, County and Municipal Employees (AFSCME) and the United Food and Commercial Workers, take Wyden to task for his Healthy Americans Act, a bill that would provide universal coverage while removing the tax exemption employers get when they provide health benefits to their employees.

"Taxing health benefits? That doesn’t make sense," the ad's narrator says. "Tell Sen. Wyden that Oregon families want quality, affordable healthcare — not taxes on their healthcare benefits."

The three major unions are running the radio ad in Wyden's backyard in the Portland and Eugene markets, to the tune of $60,000, according to those familiar with the expenditure. AFSCME is undertaking a larger pressure campaign utilizing phones, mail, canvassers and a website.

Top Oregon labor leaders took to a prominent liberal website last week to question Wyden's plan, which they compared to proposals by Sen. John McCain (R-Ariz.) during the 2008 presidential election.

Wyden's bill is far different from the proposal McCain offered last year. Wyden would add a standard deduction estimated at $17,000 for a family of four, according to estimates by the Oregon Democrat's office. More expensive plans would be subject to taxes.

The proposal would make employers' share of health premiums taxable. Unions largely stand to gain from maintaining the status quo.
Last week, Senate Finance Committee Chairman Max Baucus (D-Mont.) said he would not consider Wyden's proposal. But Baucus did release a list of priorities that unions are unlikely to be pleased by. A broadside aimed at Wyden could serve as a warning to Baucus.

Wyden "has been a champion of healthcare reform, and his work to reform the system and to encourage public options for health care coverage could change the face of our health care system, expand coverage, and make health more affordable for all Americans. But only if our Senior Senator stops lobbying for a health care benefits tax," wrote Oregon AFSCME executive director Ken Allen and Oregon AFL-CIO president Tom Chamberlain on the BlueOregon blog.

President Obama opposed the proposal during the campaign, but in March Obama's budget director, Peter Orszag, said the idea should not be taken off the table.

Finding himself on the opposite side of labor is not a normal position for Wyden. Ordinarily a strong backer of labor, Wyden voted labor's way on 94 percent of the scored votes in 2007, the last year for which the AFL-CIO has scored members of Congress. In his career in Congress, Wyden has voted with labor 88 percent of the time.