Unions, Businesses Join Against GOP Leaders’ Plan to Tax Workers’ Health Care; Pressure Forces Top Lawmakers to Back Off

A wide-ranging coalition of unions, businesses and civic groups joined together to lobby against a Republican scheme to tax all of workers’ health care benefits. Their pressure, plus complaints from rank-and-file House Republicans, forced GOP House leaders to back off.

The scheme, had it been enacted, would have affected 177 million people nationwide, warned Ben Timmins, deputy legislative director of the Fire Fighters. It also could have led to many companies dropping health insurance, or workers giving it up due to huge cost hikes.

Timmins discussed the threat on March 6 at the opening session of the union’s three-day legislative conference. The hundreds of Fire Fighters spent the ensuing two days talking with lawmakers and staffers about IAFF-specific issues – but also against the tax plan.

House Republican leaders planned to tax workers’ health care benefits as part of the GOP’s wider vow to “repeal and replace” the Affordable Care Act, which the Republicans derisively and insultingly call Obamacare. Taxing worker health benefits is also a darling cause of right wing think tanks, Timmins told the IAFF members.

Enough rank-and-file Republicans objected, however, news reports said, that the leadership supposedly dropped the health benefits tax.

Nevertheless, ACA repeal would enlarge federal deficits, and so the GOP is casting around for replacements for that lost revenue. That’s where the health care tax came in.

Right now, company payments of workers’ health benefits are an “exclusion” from companies’ taxable income. The House would have added them to the workers’ income.

The lobbying was needed, Timmins said in a later interview with Press Associates Union News Service, “because a lot of members” of Congress and their staffers “don’t even know what” the Republican leaders – Speaker Paul Ryan, R-Wis., and Rep. Kevin Brady, R-Texas, chair of the committee that writes health care and tax laws — are talking about.

“They’ve put this into overdrive,” Timmins says of the two GOP House leaders. That came true the next day, when the GOP released its overall health care plan, drawing worker fire (see separate story and Washington Window column).

Federal budget numbers show untaxed health care benefits are worth approximately $266 billion yearly, or one-fifth of overall untaxed benefits of all types. ACA repeal would enlarge deficits by $900 billion over 10 years, so the GOP wants to counteract that “loss.”

“Because of its size, it’s a pretty large target,” Timmins comments about the workers’ health benefits.

“All of labor is up there,” fighting the GOP tax scheme, Timmins said. Its coalition with business, www.donttaxourhealthcare.com, is a successor to labor’s successful campaign against the ACA’s “Cadillac tax” on high-value health plans. They won a delay, to 2020.

A coalition fact sheet points out that even capping – not eliminating – the health care benefits exclusion could cost the average worker $3,860 yearly in taxes by 2026.

“Capping the exclusion will increase health care costs for millions of Americans, increase the number of people without insurance, and result in higher deductibles and greater out-of-pocket costs for working Americans,” it adds.

The coalition is running ads, adding union and corporate backers, hosting rallies in congressional districts, and using phone calls and e-mails to alert lawmakers to the threat. It also sent a protest letter to Republican President Donald Trump ®.

Other unions in the anti-tax hike coalition are the Laborers, Unite Here, the Carpenters, and Building Trades President Sean McGarvey, speaking for the National Coordinating Committee for Multi-Employer Health Plans. 

“Proposals to cap the exclusion, would, for the first time, directly tax workers on the health benefits they receive from employers by treating the cost of those benefits as taxable wages. A recent nationwide poll found that large majorities of voters would reject proposals to tax employer-based health insurance,” the Laborers said in a statement.

“To have Republican majorities place a new tax on employee health benefits betrays the hopes of employers, workers and their families counting on this Congress to make health care better – not worse,” McGarvey said in a letter to lawmakers.

“The GOP is replacing Obamacare with Trumpcare, which will destroy the best aspects of the ACA while imposing one of the largest tax increases on the American middle class ever leveled by a political party,” said Mike Casey, chair of Unite Here’s health care task force.

“Over 177 million Americans who depend on employer- based health care for their health and well-being will soon be hit with a double-whammy by the GOP Trumpcare plan: A huge new tax on their health benefits followed by higher premiums, higher deductibles and less access to quality care,” Casey said.

“The GOP is walking the plank with Trumpcare and will soon be swimming with the wrath of an American middle class furious with their dramatic tax increase and cut in health care benefits.”

“How does this impact you?” Timmins asked in his talk to the legislative conference. “If we were to tax this, it would find its way down to you” – and to every other worker and family in the U.S.

People would get hurt in multiple ways: Having to pay higher taxes, having to buy health insurance with larger holes and higher deductibles or watching their employers cancel coverage altogether, he explained.

“This penalizes Fire Fighters and it’s similar to the Cadillac tax. But they’re calling it by a different name,” Timmins said. “Our position is we oppose taxing workers’ health care benefits, whether it’s taxing the exclusion or imposing the Cadillac tax.”

Source: PAI