Cost Shifting: Unions Gets an Exemption, But Investors Pay

By January 14, 2010Health Care, Taxation

Daniel Foster at National Review’s The Corner has more on labor’s drive to be exempted from the excise tax on high-value health insurance plans:

Look for Obama and Congressional Democrats to the expand the union carve-out to cover a  swath of the “middle-class” (the universal solvent of American politics), so they can camouflage this massive giveaway to a pet constituency.

And who pays instead? Investors. The Chicago Tribune reports, “Health Plan May Tax Investors“:

WASHINGTON – Democratic congressional leaders, intensifying the healthcare drive in marathon White House talks Wednesday, are considering a new strategy to help finance their plan — applying the Medicare payroll tax to apply for the first time not just to wages but to capital gains, dividends and other forms of unearned income.

The idea’s political advantages are threefold: It could placate labor leaders who bitterly oppose President Obama‘s plan to tax high-end insurance policies that cover many union members. It could help shore up Medicare’s own shaky finances. And the new tax would fall primarily on affluent Americans not the beleaguered middle class. But the concept also carries political risks: Many older Americans, one of the nation’s most potent voting blocs, could see their tax bills rise because they often depend on savings and investment income in retirement.

No doubt, but here’s the salient objection:  Taxing investment discourages investment. How can any politician seriously argue that legislation will encourage jobs-creation when it increases taxes on the capital necessary to create those jobs?

Earlier post here.

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