Op-ed in today's Wall Street Journal: Democrats and the Health Tax Taboo: The President Attacked McCain for Proposing a Benefits Tax, by Kimberly A. Strassel:
Mr. Baucus, the Finance Committee chairman who is helping lead the Obama health effort, is still deciding what to include in the bill. But his far bigger headache remains how to pay for this blowout. He and other Democrats have been inching toward the taboo benefits-tax, putting them on a collision course with liberal special interests like unions. Mr. Baucus's newest solution? A union payoff.
The cost estimates for the Democrats' health-care reform have by now hit $1.5 trillion over a decade. Goodness knows the architects of this beast — which they hope will include a new "public option" health entitlement — have been creative in dreaming up ways to pay for it. In recent months, the administration and Congress have floated ideas to limit tax deductions, penalize soda-pop drinking, tax alcohol, tax salty foods, further raise the price of cigarettes, tax specific companies, charge for carbon, cut Medicare payments, or even implement a national sales tax.
In each case, Democrats have confronted the bitter reality that the proposed tax is too puny (Dr. Pepper tariffs), too doomed (cap-and-trade revenue), or too politically ugly (a sales tax). Contrast this with the tantalizing reality that requiring Americans to pay taxes on some part of the company health-care benefits they now receive for free could easily raise a half-trillion dollars over a decade.
In a choice between a dozen niggling tax fights that could yield uncertain revenue, or a bigger fight over benefits taxes that could yield oodles, Mr. Baucus will take the oodles. But for two small problems.
The first is that about 99% of the Democratic Party is on record trashing the idea of taxing health benefits. Trasher-in-chief is none other than President Barack Obama, who mercilessly berated Sen. John McCain for proposing such a change during the 2008 campaign. …
The Democrats' other problem is that the usual populist line won't fly. The party would like to be able to protect itself by saying that only those who now receive the most generous benefits will face taxes. Then again, the Americans who now have the Cadillacs … of health-care coverage are union workers. Union workers "would be stuck footing more of the bill than others" …
Mr. Baucus officially floated his plans for a tax this week, only with a surprising twist: His levy will not apply to union plans, at least for the duration of existing contracts. In other words, Mr. Baucus intends to tax the health-care benefits only of those who didn't spend a fortune electing Democrats to office.
