The U.S. Senate proposal to impose taxes for the first time on ordinary people’s health plans may bypass generous employee benefits negotiated by unions.
Senate Finance Committee Chairman Max Baucus, the chief congressional advocate of taxing ordinary peoples benefits to help pay for an overhaul of the U.S. health system, says any change should exempt perks secured in existing collective- bargaining agreements, which can be in place for as long as five years.
The exception, which is payback to the unionized states such as Michigan, is adding controversy to an already contentious debate. It would shield the 12.4 percent of American workers who belong to unions from being taxed while exposing some other ordinary middle-income workers to the levy.
“I can’t think of any other aspect of the individual income tax that treats benefits of different people differently because of who they work for,” said Chris Edwards, director of tax policy studies at the Cato Institute.
Baucus, a Montana Democrat, is proposing to tax Americans whose health insurance is valued at a higher rate than what is offered to federal employees. About 40 percent of insured Americans have costlier benefits, and Baucus has said he is trying to set the level at which taxes would be imposed high enough so fewer people are affected.
The policy will affect companies such as Henderson, Nevada- based Zappos.com, where workers’ $11 per hour pay is supplemented by employer-paid health insurance plans worth about $7,500. Federal workers’ health benefits are worth about $4,200 for individuals and $13,000 for families.